Entity vs EOR break-even calculator
Enter your EOR fee and entity setup costs to find the employee headcount at which incorporating locally becomes more cost-effective than using an Employer of Record. Statutory payroll costs are identical either way and do not affect the crossover.
At 7 employees, setting up a local entity becomes cheaper than using an EOR.
Note: statutory employer contributions (CPP/QPP, EI, provincial taxes) are the same whether you use an EOR or your own entity, so they cancel out of the break-even calculation. Only the EOR management fee vs. the amortized entity setup and ongoing overhead costs determine the crossover point.
Cost comparison by headcount
| Headcount | EOR annual cost | Entity annual cost | Cheaper |
|---|---|---|---|
| 1 | $5,988 | $41,000 | EOR |
| 2 | $11,976 | $41,000 | EOR |
| 3 | $17,964 | $41,000 | EOR |
| 5 | $29,940 | $41,000 | EOR |
| 10 | $59,880 | $41,000 | Entity |
| 15 | $89,820 | $41,000 | Entity |
| 20 | $119,760 | $41,000 | Entity |
| 30 | $179,640 | $41,000 | Entity |
| 50 | $299,400 | $41,000 | Entity |
Want to see the full statutory cost breakdown per employee? Use the EOR cost estimator.
Methodology
The break-even headcount is computed by finding the smallest integer n where the annual entity cost is less than or equal to the annual EOR cost across n employees.
Annual EOR cost = headcount × monthly fee per employee × 12
Annual entity cost = (setup cost ÷ amortization years) + (monthly overhead × 12)
The entity cost is fixed regardless of headcount (within a range), while the EOR cost scales linearly. The crossover is where EOR cost first exceeds entity cost. Statutory employer contributions (CPP/QPP, EI, provincial payroll taxes, vacation accrual) are identical for both arrangements and therefore cancel out of the calculation.
Ready to see the full per-employee statutory cost breakdown? See the EOR cost estimator.
This tool is a research aid. Every constant is backed by a cited source visible on this page.