EOR or Australian Pty Ltd: which route suits your first people in Australia?

A proprietary company limited by shares is registered with ASIC through the Australian Government Business Registration Service. ASIC then issues an Australian Company Number and a corporate key. The online application needs roughly 15 minutes, and ASIC normally confirms within two business days, according to business.gov.au.

The preparation takes longer than the form. Every director needs a director ID before being appointed, and each officeholder must give written consent. The registered office has to be a physical address in Australia, which an overseas parent often meets through an accountant or a registered office service. You also need to decide the share structure and who will hold the shares.

Board composition is the question overseas parents most often underestimate. Before you settle the directors, confirm with ASIC or a corporate adviser what the Corporations Act requires about directors who ordinarily reside in Australia, because the answer decides whether someone in Australia has to take on a director’s legal duties from day one. ASIC’s register and set-up guidance is the starting point.

Registration fees are charged by ASIC and indexed each year, so check the current proprietary company registration fee and annual review fee on ASIC’s fee indexation page rather than relying on a figure quoted elsewhere.

A new company cannot pay staff until it has an Australian Business Number, a tax file number and PAYG withholding registration with the ATO. Those come after ASIC registration, and GST registration follows once turnover reaches the relevant threshold.

State and super arrangements come next. Depending on where your people work, the company may need to register for payroll tax with the state revenue office and must arrange a workers’ compensation policy with the state scheme or an approved insurer. It also needs a channel for super that gets each contribution into the chosen fund inside the 7 business day Payday Super window, and a payroll system that can report every pay run through Single Touch Payroll Phase 2.

• ASIC registration, ACN and director IDs for every director
• ABN, TFN and PAYG withholding registration with the ATO
• GST registration when turnover requires it
• State payroll tax registration where wages pass the threshold
• Workers’ compensation insurance in each state where staff work
• An STP Phase 2 payroll and a super payment channel
• An Australian business bank account in the company’s name

The obligations continue after set-up. Each year the company pays ASIC’s annual review fee and its directors pass a solvency resolution, and depending on size it may have financial reporting duties. The ATO expects an STP finalisation declaration by 14 July, and once a company is registered for NSW payroll tax it lodges monthly returns where its annual liability exceeds AUD 20,000, plus an annual reconciliation due by 28 July.

Each item is simple on its own. The difficulty is the order: several depend on the one before, and a bank account for a newly formed company with overseas directors can take longer than the tax registrations.

The EOR route is usually quicker to a first payday because the employer of record already holds its ABN, tax registrations, insurance and payroll. Your timeline is driven by the candidate’s signature, the award check and the forms described in our onboarding sequence guide.

For a new Pty Ltd, ASIC registration is fast on paper, and the time goes on everything around it. Director IDs, registered office arrangements, the bank account, tax registrations, insurance and payroll software each have their own lead times, and some cannot start until the previous step is complete. We do not publish a standard number of weeks for this path, because it depends so heavily on your directors and your bank.

Cash timing differs too. A new company pays wages, PAYG and super from its own Australian account from the first payday, so it needs funding in place before the first hire starts. Under an EOR, your company pays the employer of record’s invoice and the EOR settles wages, tax and super, which keeps the Australian banking side off your list until you are ready for it.

Some companies use both in sequence. They start with an employer of record so the first hire is not held up, register the company in parallel, and later move the employee to the new Pty Ltd once it is payroll-ready. If you plan to do that, discuss the transfer with the employer of record and an Australian adviser early, because a change of employer involves a new contract and questions about how prior service is recognised.

The employment costs themselves are largely the same on both routes: salary, 12% super on top, workers’ compensation and, above the state threshold, payroll tax. What differs is the fixed cost of running an employer and the point at which payroll tax starts.

Payroll tax is the difference most people miss. It is charged on an employer’s total wages above a state threshold. NSW levies 5.45% for 2026-27 on wages over AUD 1.2 million a year, super included, according to Revenue NSW. A new Pty Ltd with two or three staff in NSW would sit well below that threshold and pay no NSW payroll tax, unless grouping rules join it to related businesses. An EOR provider whose grouped wages already exceed the threshold passes payroll tax through from the first dollar. In our Sydney example on an AUD 110,000 base, that is AUD 6,714.40 a year out of a total employer cost of AUD 130,284.

Against that, the Pty Ltd carries its own running costs: ASIC fees, an annual review and solvency resolution, bookkeeping, a tax agent, payroll software, insurance and the time of whoever manages it. The EOR fee from USD 560 a head each month (near AUD 797 using 24 September 2026 ECB rates) stops when the employment does, while the set-up fee, where charged, is paid a single time at the start. For a few employees the EOR route is usually the lower total; as headcount rises, the fixed costs of a company spread further and the comparison shifts.

With your own Pty Ltd, your company is the employer and carries every statutory duty directly: the NES, the award, PAYG, super, STP, payroll tax, workers’ compensation and any Fair Work Commission claim. Its directors also carry duties under the Corporations Act.

With an EOR, the employer of record is the employer of your hire and holds those duties. Your company is still directing the work, and that brings some exposure of its own. Queensland and Victoria place obligations on businesses that use labour hire providers, and the Fair Work Commission can make Same Job Same Pay orders against a labour hire employer if the host’s own enterprise agreement covers comparable work. Workplace health and safety duties are shared with the business where the work is done.

Neither route removes the risk of misclassification or poor process. What changes is who deals with the ATO, the state revenue office and the Commission day to day. For a fuller account of the division of roles, read the EOR explainer

For the employee, both routes deliver the same statutory package: a written contract, the Fair Work Information Statement, pay through an STP-reporting payroll, 12% super paid with each pay run and the full NES entitlements, including 20 days’ paid annual leave for a five-day full-timer and 10 days’ personal/carer’s leave each year. The award that covers the role applies in the same way.

The visible difference is the name of the employer. Under an EOR, the employer of record’s name is on the contract and payslips, and the person works day to day with your team. Some candidates, particularly senior ones, ask about this during the offer stage and want to know who signs their payslip, so explain the arrangement plainly and tell them who to contact about pay or leave questions.

Sponsored workers are a special case. If the hire needs a Skills in Demand visa, the sponsoring employer and its obligations matter, and placing a sponsored worker with a different business may trigger separate immigration requirements. Take migration advice before choosing a route for a visa hire, since the answer may decide it for you.

A switch usually makes sense when the Australian team becomes permanent and large enough that running payroll, insurance and compliance in-house costs less than the combined EOR fees. It also makes sense as soon as you need an Australian legal entity for other reasons, such as signing customer contracts, leasing premises or bidding for government work.

There are signals that point the other way. If you are still testing demand, hiring for a project with an end date, or spreading one or two people across several states, the fixed costs and state registrations of a company weigh heavily. The employer of record model lets you learn what the market needs before committing to an entity, and the monthly fee ends with the last employment it covers.

Whichever route you take, the underlying employment rules do not change: salary plus 12% super, award coverage, the NES and state-level taxes. Employer of Record Australia can cost both routes for your real headcount so the comparison uses your numbers. For the questions to put to any provider first, see questions before signing an Australian EOR.