Once a UK business decides to build a team in Pakistan, the next decision is whether to employ through an Employer of Record or incorporate a local company. The right answer depends mostly on team size, time horizon and how much administration you want to take on.
What setting up a Pakistan entity involves
- Name reservation and incorporation with the Securities and Exchange Commission of Pakistan
- Tax registration, plus registration with social security and EOBI as an employer
- A local bank account and a process for funding it from the UK
- Local payroll, monthly tax withholding and statutory returns
- Annual accounts, audit and corporate filings
- Local legal and accounting advisers to keep it all compliant
None of this is unusual, but it takes time and ongoing cost before the first employee starts.
What using an EOR involves
The EOR already has the registered entity, payroll and compliance in place. You provide the candidate and the salary, the EOR issues the contract and onboards them, and you pay one monthly invoice. The administration is the EOR's job.
Side-by-side comparison
| Employer of Record | Your own entity | |
|---|---|---|
| Time to first hire | Days | Several months |
| Upfront cost | None | Incorporation, legal and advisory fees |
| Ongoing administration | Handled by the EOR | Payroll, filings, audit, local advisers |
| Legal employer | EOR's local entity | Your company |
| Exit if plans change | End the service | Wind up a company |
| Best for | First hires and growing teams | Large, long-term operations |
When an entity starts to make sense
An entity becomes worth considering when your team is large and permanent, you plan to sign local contracts or hold assets in Pakistan, or the combined EOR fees exceed the full running cost of a company. Many businesses start with an EOR, prove the model, and then transfer employees to their own entity later.
A practical approach
- Start with an EOR for your first hires.
- Review total cost and plans every six to twelve months.
- If an entity becomes cheaper and strategically useful, set it up and transfer employees across.
Choose an EOR that does not charge exit fees for transferring employees to your own entity, so you keep that option open.
Read more about our Employer of Record service, or book a free consultation.
Frequently asked questions
Is it cheaper to use an EOR or set up a company in Pakistan?
For small teams an EOR is usually cheaper, because you avoid incorporation, audit and local adviser costs. For large permanent teams, owning an entity can become more economical.
How long does it take to set up a company in Pakistan?
Incorporation itself can be relatively quick, but registering for tax and social security, opening bank accounts and setting up payroll typically takes several months in total.
Can I switch from an EOR to my own entity later?
Yes. Employees can transfer to your entity once it is ready. Check your EOR's terms for any exit or transfer fees.