Entity Setup

Entity setup refers to creating a foreign subsidiary, branch office, or representative office in a new country to support global expansion. Establishing a local entity allows you to directly hire salaried employees, manage payroll, and comply with local employment laws and tax compliance requirements. Without an entity, companies may face restrictions on employee onboarding, cross-border payments, and signing employment agreements. For faster market entry, many businesses choose an employer of record (EOR) solution before investing in a permanent structure.

The timeline for setting up a foreign subsidiary or branch office depends on the jurisdiction. In some countries, a private limited company can be established within 4–6 weeks, while in others, it may take 3–6 months due to regulatory approvals, international tax compliance checks, and labor law documentation. Factors such as visa sponsorship, employment pass processing, and compliance management requirements significantly impact the setup time.

A local entity enables direct hiring, compliance with international labor laws, and alignment with employee benefits such as provident fund (PF) or 13th month pay depending on the country. It also strengthens long-term credibility with regulators, banks, and partners while supporting a stable global workforce strategy. For businesses testing new markets or seeking talent acquisition flexibility, an international PEO (professional employer organization) or EOR may be more suitable than immediate entity formation.

The ideal entity type depends on your global HR (Human Resources) needs and global mobility services strategy:

Branch Office: Faster to establish but may limit operational scope.

Private Limited Company (Foreign Subsidiary): Offers broader rights, stronger tax compliance, and employee retention advantages, but takes longer to register.

Representative Office: Cost-effective but cannot issue pay stubs or generate revenue.

Setting up an entity without local legal expertise exposes businesses to significant risks, including fines for incorrect tax registration, delays in obtaining a tax identification number (TIN), and breaches of statutory labor laws. Errors in drafting employment agreements, handling mandatory benefits, or managing notice periods can result in employee disputes, regulatory penalties, or reputational damage. Partnering with Topsource ensures that entity setup is fully compliant with local tax, employment, and corporate regulations from the outset