How to hire your first international employee at a B2B SaaS company
Most B2B SaaS founders hire their first international employee as a contractor to avoid complexity. That works until it doesn't — and when it doesn't, it's expensive. The right path depends on two variables: whether the person qualifies as an employee under local law (often, they do, regardless of what your contract says), and how many people you expect to hire in that country over the next 18 months. If the answer is more than a handful, the EOR vs. entity decision is worth modeling explicitly before you make the hire. This guide walks you through what you need to know.
Before you start: what you need in place
An entity or a legal mechanism to employ. You cannot legally employ someone in another country through your US entity. You have three options: (1) engage them as an independent contractor — which carries misclassification risk if the relationship looks like employment, (2) use an Employer of Record (EOR) — the EOR legally employs them on your behalf, (3) incorporate a local entity — right for scale, wrong for a first hire.
A classification opinion. Before you engage anyone as a contractor internationally, get a written opinion from local employment counsel on whether they'll be classified as an employee under local law. In most countries, classification is based on behavioral factors (who controls how and when work is done, whether the person works exclusively for you) — not what the contract says. UK IR35, German Scheinselbständigkeit, French contrat de travail présumé: these exist specifically to catch mis-classified employees.
A budget that includes mandatory employer contributions. The salary number in your offer letter is not your total cost. Mandatory employer social contributions range from ~13.8% in the UK to ~42–45% in France. These are non-negotiable and non-waivable. If you're modeling headcount cost, add the country-specific burden before you sign anything.
Step 1: Classify the relationship correctly — contractor vs. employee
The most common mistake B2B SaaS founders make when hiring internationally: treating someone as a contractor when the local legal framework would classify them as an employee.
The misclassification risk is highest when:
- The person works exclusively for your company
- They follow your processes, schedule, and tools
- They have no meaningful ability to substitute another person or work for other clients
- You control the output and the method
If those conditions are true, local labor law in most countries will deem them an employee — regardless of what the contract says. The consequence: back-payment of mandatory benefits, unpaid employment taxes, and potential penalties. Some countries (France, Germany) also require severance that accrues from the start of the relationship, not the date you reclassify.
The safe standard: if the relationship looks like employment, treat it as employment from day one. Use an EOR until you're ready to incorporate.
Step 2: Decide between EOR and owned entity
This is the core financial decision. The NAVA Benefits 101 guide covers benefit compliance frameworks by country; layer that onto the cost model below before you decide.
| EOR (Employer of Record) | Owned local entity | |
|---|---|---|
| Who legally employs the worker | The EOR | Your company |
| Mandatory benefits compliance | EOR handles it | Your responsibility |
| Setup time | Days to weeks | 3–6 months |
| Setup cost | None | $5,000–$30,000+ |
| Per-employee ongoing cost | $199–$599/month | Lower at scale; primarily payroll + local HR |
| Benefits design control | Limited (EOR sets standard package) | Full control |
| When to consider entity | 10+ employees in one country | When EOR cost exceeds entity cost |
The EOR cost math is straightforward: at $299/month (mid-range EOR like Remote), you pay $3,588/year per employee to avoid incorporation, local payroll, and benefits administration. At 3 employees in one country, that's ~$10,800/year. Incorporating a UK entity costs ~$5,000–$8,000 in legal fees plus ongoing accounting — a breakeven at roughly 3–4 employees when you include the internal time cost of managing a local entity.
The honest crossover: most B2B SaaS companies should use an EOR until they have 10+ employees in a single country. Below that, the EOR fee is almost always cheaper than the fully-loaded cost of incorporation and compliance.
Step 3: Choose your EOR provider
Not all EOR providers are structured the same way. The distinction that matters: does the EOR own entities in your target country, or do they use third-party sub-contractors? Using a third-party means an additional layer between your employee and the company managing their payroll — more latency, more failure points.
| Provider | Entity model | Price (est.) | Operator rating | Best for |
|---|---|---|---|---|
| Remote | Owns entities directly in most countries | $299–$599/emp/mo | 4.5/5 | Best all-around; cleanest structure |
| Deel | Owns some; uses 3rd parties in others | ~$599/emp/mo | 3.7/5 | Global EOR only; avoid Deel's US PEO |
| RemoFirst | EOR; newer | ~$199/emp/mo | 3.5/5 | Cost-sensitive; smaller footprint |
| Rippling Global | EOR + global payroll integrated with Rippling HRIS | Custom | 3.9/5 | Already on Rippling HRIS |
| Papaya Global | EOR | Variable | 2.2/5 | Avoid — holds 3-month salary deposit |
Remote is the top pick in operator surveys for B2B SaaS companies at the $3M–$20M ARR range. The Rippling Global option makes sense if you're already on Rippling HRIS and want a unified system; the convenience premium is real.
Step 4: Understand mandatory benefits by country
When you use an EOR, these are included in their service. When you run your own entity, you're responsible for all of them. These are the most common markets for B2B SaaS international hires:
United Kingdom: National Insurance at ~13.8% of salary above the threshold. Auto-enrolment pension with a 3% employer minimum. 28 days paid annual leave. The NHS covers primary health — private medical insurance (BUPA, AXA) is expected at tech companies but not legally required.
Canada: CPP employer contribution (~5.95%) plus Employment Insurance at ~1.4× the employee EI premiums. Extended health and dental ("benefits" in Canada) are not legally mandatory but are expected — failing to offer them is a recruiting red flag. Budget ~$400–$800/employee/year for extended health.
Germany: Social insurance contributions total ~20% of gross salary (health, pension, unemployment, long-term care). 20 days paid vacation minimum. Company pension (bAV) is expected. Termination is heavily regulated — factor severance costs before you hire.
Australia: Superannuation at 11.5% of gross salary into the employee's super fund. 4 weeks annual leave. Budget 11.5% on top of every salary — this is mandatory, not optional.
India: Provident Fund (EPF) at 12% employer contribution. Group health insurance (Mediclaim) is nearly universal at tech companies and inexpensive (~₹15,000–₹30,000/employee/year). Failing to offer it is a serious recruiting disadvantage.
The Sequoia 2026 Benefits Benchmark covers what competitive international benefits packages look like for tech companies in each of these markets.
Step 5: Build the real cost model
The offer letter salary is the floor, not the ceiling. Here's the full-cost structure for an international hire:
- Base salary (what the employee sees)
- Mandatory employer contributions (13.8% UK → 42–45% France; varies by country)
- EOR fee ($199–$599/month) OR entity amortized setup cost + local accounting (~$5–10k/year)
- Mandatory benefits (pension, health, leave accruals)
- Supplemental benefits (expected by local market)
Common mistakes B2B SaaS founders make
Paying an international contractor like a US contractor. US contractor agreements don't bind foreign courts. A 1099-style relationship in Germany or France will almost certainly be reclassified on audit.
Using a US benefit plan to cover international employees. International employees — and most international contractors — are ineligible for US health plans, ICHRA/QSEHRA, and 401(k). Placing them on these plans risks plan disqualification.
Choosing the wrong EOR because of price. RemoFirst at $199/month is cheap. If they don't own an entity in your target country and use a subcontractor, you have less recourse when something goes wrong. For mission-critical hires, the $100/month premium for Remote's owned-entity model is worth it.
Incorporating before you know you'll hit 10 employees. A UK entity costs $5,000–$8,000 to set up and $3,000–$5,000/year to maintain (accounting, filings). If your second UK hire never materializes, you spent money to manage an empty entity. Use EOR until the headcount conviction is real.
Not telling your employment counsel about equity. Equity grants to international employees — especially options — have country-specific tax and securities law implications. UK EMI options work differently from US ISOs. French employees have specific rules on employee ownership. Involve counsel before you grant.
How a fractional finance team can help with the EOR vs. entity decision
The EOR vs. entity decision is fundamentally a financial model — breakeven analysis, total cost of ownership, cash flow timing, and benefit cost by country. It's the kind of decision that looks simple until you're looking at the full spreadsheet.
At Bridges, we work with B2B SaaS companies building their first international teams — building the cost models, identifying the mandatory contribution burden by country, and making sure the total compensation package you're offering is competitive in the local market and compliant with local law. If you're making your first international hire or evaluating expansion into a new country, this is worth a 30-minute call before you make an offer.
