Moving fast and breaking things — has become a bit of a mantra for tech startups in years past — but you may want to think twice about breaking international labor laws. Tech companies that hire remote talent in different parts of the world and are non-compliant with the local employment laws can face financial penalties that can have a lasting impact on their business and their bottom line. This makes it critical for tech companies that choose to hire overseas to understand the hidden costs of compliance and why tech startups need an Employer of Record (EOR) on their side.
Truss provides a viable solution for growing tech startups — both as a global hiring platform and an Employer of Record provider in different parts of the world. Armed with this combination of innovative business solutions, you can find, recruit, and hire the talent your startup needs to grow and better manage global payroll to avoid any compliance mistakes or issues that may come up.
Contact Team Truss today to learn more about our global hiring platform and employer of record services tailored to the needs of tech companies!
READ MORE: 5 Benefits of Hiring Remote Talent for Tech Startups
What Is an Employer of Record?
The first thing that tech startups need to know and understand about EORs when they hire remote talent from emerging markets around the globe is what an employer of record is and how it protects your company. An employer of record serves as a legal middleman for companies that hire overseas, acting as the legal employer on paper, while employees still operate within the structure of your tech company. This means that U.S.-based tech companies do not need to set up a local entity in the country where they choose to hire to remain compliant.
Employer of record providers — like Truss — handle a variety of issues that pertain to local employment laws in the country where you choose to hire. EORs handle local, state, and national taxes, oversee payroll for global employees, help set up, establish, and manage benefits packages for remote employees, assist with work Visas when needed, and ensure that any and all terminations follow local labor laws.
3 Hidden Costs of Compliance
When you examine local labor laws in foreign countries through the lens of compliance, there are three primary costs that an employer of record can help you avoid. This overview of the hidden costs of compliance will help you better understand how an EOR can benefit your company.
- Misclassification and Compliance Penalties: The primary cost of noncompliance with local labor laws is the financial penalties that go hand in hand with misclassification. These costs can include back taxes, unpaid government benefits similar to social security, and fines that can reach six figures.
- Local Entity Setup and Costs: An alternative to utilizing an employer of record service is establishing your own local entity in the country where you choose to hire. These hidden costs can include legal fees, the costs of a physical office space, and maintenance for a local entity that can range from $15,000 – $40,000 per year.
- Data Security Risks: When you are a tech startup, the code and programs you develop are the key to your long-term success. If your employment contracts do not protect you and your Intellectual Property, it can create a real risk of losing your property to competitors or having it stolen, which can lead to financial ruin.
What Are the Benefits of an Employer of Record for Tech Startups?
A basic understanding of how an employer of record works will help you lay a foundation for the growth of your tech startup — but that understanding still does not highlight the key benefits you will enjoy when you partner with an EOR provider.
Here is a closer look at the benefits of an Employer of Record for tech startups:
1. Protect Intellectual Property
A basic work-for-hire employment contract that may be valid in the United States may not be legally relevant in a foreign country. A smart employer of record will include IP Assignment clauses in employment contracts that will provide legal protection for your company against theft of your intellectual property.
2. Reduced Costs
When you look at the financial costs of a local entity versus an employer of record, it is no contest. A local entity can cost $15,000 – $40,000 or more per year to set up compared to $200 – $700 per month for remote employees around the world with an EOR.
3. Improved Efficiency
In addition to higher costs, local entities take more time and effort to set up and execute. It can take anywhere from three months to a year to set up a local entity compared to an employer of record that can help you hire and onboard global employees within 48 – 72 hours, making it a faster and more efficient way to grow your business.
4. Avoid Misclassification Penalties
There is a fine line between a contractor and a permanent employee, and misclassifying employees can lead to financial consequences. An employer of record protects you and your interests by assuming the legal obligations of employee classification and helping you avoid additional taxes or fines.
5. Increased Access to Global Talent
By partnering with an employer of record, you expand the talent pool exponentially, allowing you to quickly and easily hire top talent in emerging tech markets like Central Asia. With enterprise-level benefits and the ability to easily negotiate with potential job candidates, you open the door to premium talent at more affordable salaries.
READ MORE: Why Tech Startups Are Moving Engineering to Central Asia in 2026
Why Choose Truss as Your EOR in Central Asia
A deeper look at the hidden costs of compliance illustrate why tech startups need an EOR in their corner when they hire remote global talent — and Truss is the right choice.
Truss has years of experience operating as an employer of record in Central Asia, Eastern Europe, and other parts of the world. That experience has made us familiar with the ins and outs of compliance in many emerging tech markets around the globe, and this experience and familiarity means that when you hire remote employees via the Truss global hiring platform, they can hit the ground running and you can accelerate the growth of your startup.
Contact Truss today to learn more about how our employer of record services can help you build a global team and long-term success in the tech industry!
