🇺🇸 EOR Guide —
United States
Everything you need to know about using an Employer of Record in United States — provider fees, compliance risks, hire speed, and EOR vs direct employment.
FICA (employer)
7.65% (SS 6.2% + Medicare 1.45%)
Federal minimum wage
$7.25/hr (many states higher)
FUTA rate
6% on first $7,000 (credits reduce to 0.6%)
At-will employment
Yes (with state exceptions)
Statutory leave (federal)
12 weeks unpaid FMLA (50+ employees)
EOR providers active
Deel, Remote, Rippling, Gusto, Papaya, Oyster
Our Recommendation
EOR for multi-state hiring or international companies entering the US
The US has relatively low employer taxes (7.65% FICA) but enormous complexity across 50 states — each with different income tax, unemployment tax, workers compensation, and employment law. EOR is the fastest path to multi-state hiring. For international companies entering the US market, EOR removes the need to form a US entity before validating the market.
EOR provider fee range for United States
Rates vary by provider, headcount, and benefits scope. Always request itemised quotes from at least three providers.
EOR vs Direct Employment
EOR advantages in United States
- No need for state registrations
- Provider handles FICA, FUTA, SUTA per state
- Hire across any state immediately
EOR limitations in United States
- 10–18% markup
- Benefits package less flexible than direct
- Provider controls employer-side employment decisions
Direct employment advantages
- Full control over benefits and compensation
- No markup cost at scale
- Direct employment relationship
Direct employment limitations
- State-by-state compliance (50 states)
- Benefits administration complex and costly
- At-will employment but state exceptions vary widely
Local Entity Options
Setting up a legal entity in United States.
If you outgrow EOR or prefer direct employment, these are the main legal structures available in United States for foreign companies.
Limited Liability Company (LLC)
Setup time
1–5d
Est. cost
$500
Min. capital
None
Corp. tax
21%
Div. WHT
0%
VAT rate
—
Annual obligations
- Annual report (state)
- Federal tax return (Form 1065 or 1120 depending on election)
- State tax returns
- Payroll tax deposits
Overview
Flexible structure combining corporation liability protection with pass-through taxation. Single-member LLC treated as disregarded entity (Schedule C). Multi-member LLC treated as partnership (Form 1065). Can elect to be taxed as C-Corp or S-Corp. Wyoming and Delaware are popular states for formation. No minimum capital. Widely used for real estate, joint ventures, and smaller businesses. Foreign-owned single-member LLCs must file Form 5472 — often overlooked but significant penalty (USD 25,000) for non-filing.
C-Corporation (Delaware Inc.)
Setup time
1–3d
Est. cost
$1,500
Min. capital
None
Corp. tax
21%
Div. WHT
0%
VAT rate
—
Annual obligations
- Annual franchise tax (Delaware)
- Federal corporate tax return (Form 1120)
- State corporate tax returns
- Payroll tax deposits and Form 941
- Annual report (state of incorporation)
Overview
Delaware C-Corporation is the gold standard for US companies — preferred by VCs, used by 67% of Fortune 500. No minimum capital. No Delaware residency requirement for directors or shareholders. Delaware Court of Chancery provides sophisticated business law. Federal corporate tax 21% (TCJA 2017). State income taxes vary — Delaware has no state corporate tax on income earned outside Delaware. No US dividend withholding tax for domestic shareholders. Foreign shareholders subject to 30% FDAP withholding (reducible under treaties). No VAT/GST at federal level — state sales tax varies 0-10%.
US Branch of Foreign Corporation
Setup time
2000d+
Est. cost
—
Min. capital
$21
Corp. tax
21%
Div. WHT
30%
VAT rate
—
Annual obligations
- Federal corporate tax return (Form 1120-F)
- State corporate tax returns
- FDAP withholding (Form 1042)
- Payroll tax deposits
Overview
Foreign corporations can operate in the US via a branch. Must file Form 1120-F (US Income Tax Return for Foreign Corporation). Branch profits effectively connected with US trade subject to 21% corporate tax. Branch Profits Tax (BPT) of 30% (treaty-reducible) applies to after-tax earnings deemed distributed — equivalent to dividend withholding. Must register in states where doing business. Generally less efficient than US subsidiary due to BPT.
Compliance Risks
Key EOR compliance risks in United States.
Discuss each of these with your chosen provider before signing.
State-by-state employment law
HighCalifornia, New York, and Washington have significantly more employee-protective laws than federal minimums. Minimum wage, paid leave, and classification rules vary dramatically by state.
Worker classification (1099 vs W-2)
HighThe IRS and state agencies apply different tests for contractor classification. Misclassification triggers back taxes, penalties, and potential class action exposure in states like California.
Workers compensation
MediumMandatory in all states. Rates vary by industry and state. Your EOR handles this but confirm coverage extends to all states your employees work in.
Benefits compliance (ACA)
MediumEmployers with 50+ full-time equivalent employees must offer ACA-compliant health coverage. Your EOR should track your headcount across all clients.
Cost Estimator
Estimate your United States EOR cost.
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