EOR vs Setting Up a Company in Australia - Which Is Right for You?

Let me guess. You've found a great candidate in Australia, maybe a few, and now someone in your team has asked "should we just set up an entity there?"

It's a fair question. And honestly, for most of the overseas businesses we work with, the answer is not yet. Here's how to actually think about it.

What does setting up a company in Australia actually involve?

It's not just registering a name and opening a bank account. To legally employ someone in Australia through your own entity you're looking at registering with ASIC, getting your ABN and ACN sorted, setting up PAYG withholding with the ATO, establishing a compliant superannuation clearing house, registering for WorkCover insurance, and on top of all that, registering for payroll tax in every state your employees work in.

That last one trips people up constantly. Payroll tax in Australia is a state-based tax, and every state runs its own rules, thresholds and filing requirements. NSW, QLD, VIC, WA, SA are all different. Multiple states means multiple registrations, multiple lodgements, multiple deadlines.

Realistically you're looking at 4-8 weeks to get all of this in place before your first employee can be legally paid. And that's before you factor in the cost of accountants, lawyers, and the ongoing admin to keep it all ticking.

A note on payroll tax thresholds though

Here's something worth knowing, and I want to be straight with you on this because it's often misunderstood.

If your total Australian wages are below the payroll tax threshold in your relevant state, you don't pay payroll tax at all. And those thresholds are actually pretty generous. In the 2025-26 financial year they sit at $1.3M in QLD, $1.2M in NSW, $1M in WA and $900K in VIC. Most businesses hiring 1-5 employees in Australia won't be anywhere near those numbers.

So yes, if you're running a small Australian team through your own entity, the payroll tax line item probably doesn't apply to you. That's a real saving.

But payroll tax is just one line on a much longer compliance checklist. You're still dealing with ASIC, ATO, superannuation, WorkCover, Fair Work obligations, ongoing reporting and the professional fees that come with managing all of it. That overhead doesn't disappear just because payroll tax isn't in the picture yet.

Which brings me to who actually uses Employer of Record Australia

Almost every client we work with is an overseas business with fewer than five full-time employees in Australia. That's not a coincidence, it's exactly the situation where Employer of Record Australia makes the most sense.

They've found the right people. They want them hired properly and paid correctly. They don't want to spend the next two months setting up an Australian entity before they can even get started. And they definitely don't want to manage ongoing ATO lodgements and Fair Work compliance from a head office in Singapore or London or San Francisco.

With Employer of Record Australia, you can onboard a new employee in 24 hours. You get one clean monthly invoice covering salary, super, WorkCover and our fee. No portals to learn, no state revenue offices to deal with, no compliance calendar to maintain.

You get the people without the hassle. That's genuinely the simplest way to put it.

So when does setting up your own entity make sense?

Honestly, not until you're scaling. Once you're looking at 10+ employees in Australia and you're fully committed to the market long-term, the per-employee cost of working with Employer of Record Australia starts to add up and a local entity may work out more cost effective. That's the point where it's worth modelling properly. Until then, the compliance overhead of running your own entity almost always outweighs any cost saving.

TL;DR

For most overseas companies hiring a small Australian team, Employer of Record Australia is the faster, simpler and lower-risk way to get started. You're compliant from day one, your people are paid correctly from day one, and you're not locked into the overhead of a local entity while you're still building your presence in the market.

If you'd like to talk through what that looks like for your business specifically, reach out!

Jasmin Robertson is Operations Director at Employer of Record Australia, a Brisbane-based EOR, sponsorship and recruitment business helping global companies hire in Australia.