EOR vs setting up your own entity in Bangladesh
A side-by-side comparison of cost, time to first hire, compliance burden, control and exit for the two ways a foreign company can employ people in Bangladesh — with the crossover point where incorporation starts to make sense.
Should a foreign company use an EOR or open an entity in Bangladesh?
Use an Employer of Record if you need fewer than roughly 40 employees, want the first hire within a week, and do not need to invoice Bangladeshi customers in taka. Open your own entity for a large or permanent operation, local revenue, or a licence in your own name. Many companies start with an EOR and incorporate later.
The decision is rarely about legality — both routes are lawful — and mostly about fixed cost, speed and management attention. An entity gives you total control and the lowest marginal cost per employee at scale, at the price of 3–6 months of set-up, a resident director or attorney, an office lease, statutory audit and a compliance calendar you own. An EOR gives you employees in 5–7 business days for a fixed fee from USD 299 and no fixed overhead, at the price of a per-employee margin and a contractual, rather than direct, employment relationship.
How do the two routes compare on cost, time and risk?
Incorporating typically costs USD 12,000–25,000 in the first year before salaries and takes 3–6 months to reach a compliant payroll; an EOR costs USD 299 per employee per month with no set-up fee and takes 5–7 business days. Compliance risk sits with you under an entity and with Nexus under an EOR. Exit is liquidation versus 30 days notice.
| Criterion | Own entity (private limited company) | Employer of Record (Nexus Payroll) |
|---|---|---|
| Who is the legal employer | Your Bangladesh subsidiary | Nexus Payroll Limited |
| Time to first compliant hire | 3–6 months (name clearance, RJSC incorporation, trade licence, e-TIN, VAT BIN, bank account, BIDA registration, payroll set-up) | 5–7 business days |
| Set-up cost | USD 12,000–25,000 first year: legal and secretarial fees, minimum capital remittance, office lease, director, accounting and audit | None; refundable deposit of one month's total employment cost |
| Monthly running cost (excluding salaries) | Office, accountant or firm, company secretary, audit accrual, bank charges, compliance filings | USD 299 per employee |
| Marginal cost per additional employee | Low once fixed costs are covered | USD 299 (USD 249 at 10+) |
| Compliance ownership | Yours: Labour Act, Labour Rules, NBR withholding, VAT, annual return, audit, BIDA reporting | Nexus, with indemnity for penalties caused by our errors |
| Control over employment terms | Complete | Complete within the law; contract terms set with you |
| Ability to invoice Bangladeshi customers | Yes | No — EOR employs staff only |
| Expatriate sponsorship | Your entity sponsors within BIDA ratios | Nexus sponsors within its ratio, or manages on your entity's behalf |
| IP ownership | Subsidiary, then intra-group assignment | Assigned directly to you in every contract |
| Profit repatriation | Dividends subject to withholding tax and Bangladesh Bank rules | Not applicable — you pay a service invoice |
| Exit | Winding-up: 6–12 months, court or voluntary liquidation, tax clearance | 30 days notice; employees transferred or exited under the Act |
| Best for | 40+ staff, local revenue, manufacturing, licensed activities | 1–40 staff, remote teams, market testing, speed |
What does incorporating in Bangladesh actually involve?
A foreign-owned private limited company is formed through name clearance and incorporation at the RJSC, followed by a trade licence from the city corporation, an e-TIN and VAT registration with the NBR, a bank account with inward remittance of share capital, BIDA registration for the foreign investment, and then Labour Act registrations before the first employee can be paid.
- Name clearance at the Registrar of Joint Stock Companies and Firms (RJSC), online.
- Incorporation: memorandum and articles, director and shareholder documents (notarised and, for foreign signatories, legalised), registered-office address.
- Trade licence from the relevant city corporation; renewed annually.
- e-TIN and VAT BIN from the NBR; monthly VAT returns thereafter even with nil turnover.
- Bank account and inward remittance of paid-up capital with a Bangladesh Bank encashment certificate.
- BIDA registration for the foreign investment and, later, any work permits.
- Labour registrations, service rules, registers, and a payroll process — or outsource payroll to us.
- Ongoing: annual return and audited accounts to RJSC, corporate tax return, withholding returns, board meetings.
Nexus Payroll's entity-setup advisory (from USD 2,900) coordinates the steps with Gulshan Legal Associates and Rahman & Karim, Chartered Accountants while your team stays employed through the EOR, so the incorporation timeline never delays hiring.
This page is informational and reflects Bangladesh law as we understand it on the review date. It is not a substitute for licensed legal or tax advice in Bangladesh or in your own jurisdiction. Statutory figures change; confirm current values with your adviser before relying on them.
EOR vs entity FAQ
At what headcount does our own entity become cheaper than an EOR?
On our figures, the crossover sits around 35 to 50 employees. An entity's fixed running cost — director, office, accounting, audit, secretarial and compliance — is largely independent of headcount, while EOR fees scale per employee. Below the crossover the EOR is cheaper and faster; above it the entity wins on cost, provided you want the management burden. We model the crossover for your salary mix on request.
Can we start with an EOR and move to our own entity later?
Yes, and most clients who incorporate do exactly that. Employees transfer from Nexus Payroll to your new company with continuity of service preserved by agreement, Provident Fund balances move to your fund or remain in ours by arrangement, and we can run payroll for the new entity so nothing changes for the employees on payday. Our entity-setup advisory manages the incorporation while the team keeps working.
Does a foreign company need BIDA approval to hire through an EOR?
No. BIDA registration is required for foreign investment and for sponsoring expatriate work permits, not for a foreign client engaging an EOR to employ local nationals. The employer is Nexus Payroll Limited, a Bangladeshi company. BIDA becomes relevant only if you incorporate, open a branch or liaison office, or bring in foreign staff.
Get the crossover calculated for your team
Tell us the headcount you expect over 24 months and the salary mix. We return an EOR-versus-entity cost model you can put in front of your CFO.