Most companies in Asia planning a US move start with the same question: how do we set up a US company?
It is the wrong question to start with, and an expensive one to answer first.
Incorporating in Delaware is trivial. Filing takes about a day and the tax ID costs under $100. What follows is neither trivial nor quick, and for a company headquartered in Asia there is a step that companies in most other regions never face: getting money out of your home country and into that new US entity is itself a regulated transaction.
Meanwhile, the thing you actually want, an American on your payroll doing work for you, does not require a US company at all.
Start With the Employee, Not the Entity
Your first US hire needs three things: a legal employer in the US, correct federal and state tax withholding, and benefits that meet American market expectations. A W-2 at the end of the year, not an invoice.
None of that runs through your payroll in Singapore, Bangalore, or Tokyo. Employment law follows the worker, so an employee in Illinois is employed under US federal law and Illinois state law, whatever your head office does. Your payroll system has no way to withhold US tax or remit it, and the IRS does not treat a foreign parent as an exemption.
Wiring someone a monthly amount and calling it a consulting fee does not solve this. It leaves them without US benefits, leaves you without withholding, and if the arrangement looks like employment, exposes you to back taxes and penalties in whichever state they live in.
Funding a US Entity Is a Regulated Transaction
This is the part that separates a company in Asia from one in Europe or Canada, and it is worth understanding before you pick a route.
How heavy this is depends entirely on where your company sits. The same US hire that takes days through an Employer of Record can take months if you fund a US entity from the wrong market first:
- China is the heaviest. Outbound investment now clears three agencies and a national security review, a minimum of three months before any capital moves.
- India runs a full overseas investment framework under FEMA, with filings through your dealer bank and an annual report every year the entity exists.
- Vietnam exempts small projects from the investment certificate as of 2026, but the State Bank still controls whether the money can actually leave.
- The Philippines is among the lightest, with an outward investment allowance high enough that most companies never approach it.
None of this applies to hiring through an Employer of Record. Paying an EOR is buying a service, not investing capital abroad, so it sits outside the outbound investment framework entirely. For a company testing the US market with two or three people, that difference alone often settles the decision.
Confirm your own position with your finance team or AD bank before committing either way.
Every State Is Its Own Jurisdiction
Companies from Asia tend to arrive in the US expecting one jurisdiction. One country, one federal tax authority, one currency. In employment terms, it behaves like fifty.
This escalates faster than people plan for, because Asian companies rarely land in one place. Engineering goes to California or Washington, sales goes wherever the customers are, operations follows cost. A team of twenty-five spread that way can touch eight or more states, each with its own registrations and deadlines.
An employee in California lives under different tax, wage, and benefits rules than one in Texas. Add a second person in New York and a third in Illinois, and you are suddenly holding three sets of state registrations, three state tax regimes, three unemployment insurance accounts, and in some of those states a separate paid-family-leave contribution on top.
The "just open a US company" advice skips this part. The multi-state registration tail is the expensive half, and that gap between an easy setup and an expensive operating reality is the whole reason the EOR route exists for US hiring.
Option One: Use an Employer of Record
An Employer of Record is a US-based legal entity that employs your American hire for you. It runs their US payroll, withholds their federal and state taxes, files with the IRS and their state, enrolls them in benefits, and carries the compliance load for every state your team lives in. They work for you day to day. On paper, the EOR is their employer.
You pay the EOR her salary, the employer-side taxes, and a per-employee fee.
This fits when you are hiring one to fifteen people in the US, you want them working in days rather than months, and you have no appetite for incorporating and registering across multiple states before you know the market is worth it. It fits less well once you have twenty-plus people concentrated in a single state and a permanent US operation, because at that scale your own entity starts to pay for itself.
The trade-off is that the EOR remains part of the process. Since it is the legal employer, changes to the contract, terminations, and less common benefits requests must go through its team. For most Asian companies hiring in the US for the first time, that extra step is worth it. The EOR takes care of the difficult state-by-state rules, making it a practical starting point for a first American hire.
Option Two: Set Up Your Own US Entity
Here you incorporate a US company, usually a Delaware LLC or C-corp, get a federal Employer Identification Number (EIN), open a US bank account, register as an employer in every state where you have a worker, stand up payroll, and engage a US accountant.
The incorporation itself is quick and cheap, and that is the part people quote. A Delaware LLC files in about a day, and the EIN can be issued the same day for under $100. What they leave out is everything after: state-by-state employer registration, multi-state payroll, ongoing federal and state filings, and US benefits administration. All-in, realistic setup runs from roughly $5,000 to $40,000 depending on how many states you touch, and the obligations never end.
This makes sense when the US is a strategic, long-term market, your headcount in one state is climbing past ten or fifteen, and you have the finance capacity to carry US compliance. If you already run payroll across several countries, the exercise will feel familiar, though the US multi-state layer is heavier than most single Asian markets.
Watch one thing: a US entity does not solve the state problem. You still register and file in every state where an employee lives. Incorporation buys you a US employer, not fifty states of compliance. Plenty of companies end up running their own entity for the concentrated team in their main state and an EOR for the remote people scattered everywhere else.
One thing trips up Asian companies specifically: A US PEO is not a substitute for an EOR here. A PEO works on co-employment and assumes you already own the US entity, so if you have no US company yet, a PEO does not solve your problem. An EOR does.
Option Three: Engage a Contractor
This is the fastest and cheapest route, and it is legitimate only when the relationship is genuinely contracting.
It works when she sets her own hours, uses her own equipment, works for other clients, invoices for deliverables, and handles her own taxes. You collect a Form W-9, pay her invoices, and issue a 1099 at year-end. No payroll, no withholding, no state registration.
It falls apart when they are really an employee: full-time, exclusive to you, on your schedule, on your systems, reporting to your manager. The US tests this at both the IRS and state level, and states like California run a strict "ABC test" that treats most full-time workers as employees no matter what the contract says. Get it wrong, and you owe back taxes, unpaid overtime, penalties, and the employer contributions you skipped.
Contractors are a real option for genuinely independent work. For a full-time hire, they are not, and the US penalties for pretending otherwise are steep.
What It Actually Costs
For finance teams in Asia, the surprise in US employment is not the federal tax rate. It is lower than you might guess. The surprise is how fragmented the rest of it is.
Federal employer-side costs stay modest. FICA is 7.65% of wages, which breaks down as 6.2% Social Security up to the annual wage cap plus 1.45% Medicare, and federal unemployment (FUTA) adds only a small amount per employee. Depending on where you hire in Asia, that federal burden may land close to, or even below, what you already pay at home.
Then the state layer arrives, and it swings widely. State unemployment insurance (SUTA) carries a different wage base and rate in every state. A growing number of states add disability and paid-family-leave contributions. Workers' compensation insurance is mandatory in almost every state and priced by role and location.
Then there is health insurance, which is not a tax at all. There is no national system funded by contributions the way there is across much of Asia. American employees expect employer-sponsored cover as a baseline, and for a small team it can be one of your larger line items. An EOR gets you group rates that a foreign company with three US employees could not negotiate alone.
So a US hire tends to be light on employer taxes but heavy on administration, simply because the pieces are scattered.
Then add the EOR fee if you go that way. Ours is $579 per employee per month, flat, with no deposit and no pre-funding. Some US EOR providers hold a deposit or charge a percentage of salary, so check the full pricing structure before you sign, because it rarely shows up in the headline number.
What Surprises Companies From Asia
A few things land differently than they would at home, and they are worth knowing before you make the offer rather than after.
At-Will Employment Is the Default
Most US states are at-will, meaning either side can end the relationship at any time, usually with no statutory notice period and no severance. To employers from markets with notice requirements and dismissal protections, this feels strikingly loose. It also means building in contractual notice is a choice you make, not a default you inherit.
The 50-Employee Cliff Is Real
Once you reach 50 full-time-equivalent US employees, the Affordable Care Act's employer mandate applies, with meaningful per-employee penalties for getting it wrong. Not a first-hire concern, but one to plan for as you scale.
"The US" Is Not One Jurisdiction
Worth repeating, because it is the point that costs the most. What a US hire actually involves depends on the state, and a remote team spreads that across many states at once.
The Time Zone Reality
This is the friction that surprises Asian teams more than the compliance does, so it deserves its own mention.
Most of Asia sits eleven to fourteen hours ahead of US business hours. Singapore to Chicago is thirteen. Tokyo to San Francisco is sixteen or seventeen. There is little natural overlap with a US workday, which makes async discipline less of a nice-to-have and more of a requirement: written decisions, recorded updates, clear handoffs, or a fixed overlap window that someone agrees to work.
It is entirely doable, and plenty of Asia-headquartered companies run US teams well. Just make it a deliberate decision rather than something you discover in month three.
Sequencing a US Entry
For most companies coming from Asia, the sensible path is staged rather than decided all at once.
Start with an EOR for the first few hires. It sidesteps the outbound investment process, needs no incorporation, and puts someone on payroll in days rather than months. If the market does not work out, you unwind it by ending a service contract.
Incorporate once the picture is clear: one state has crossed roughly ten people, revenue justifies the compliance overhead, and you know you are staying. Then run your own entity for the concentrated team and keep the scattered remote employees on the EOR, which is where most companies land anyway.
Use contractors only where the work is genuinely independent. A full-time role dressed as contracting is a false economy in the US, and the classification tests are stricter than most of the region's equivalents.
The federal structure, the fifty-state problem, and the three routes are the same wherever you are headquartered. What changes is the capital side and the clock: a European company hiring in the US moves money freely and works an easier overlap window.
Frequently Asked Questions
Does a Company in Asia Need a US Entity to Hire an American?
No. An Employer of Record employs the person through its own US entity and handles federal and state payroll, tax withholding, benefits, and compliance while you direct the work. Incorporating is the alternative, and it takes longer, costs more upfront, and in some markets triggers outbound investment reporting that hiring through an EOR does not.
What Regulatory Steps Apply When Funding a US Subsidiary From Asia?
It depends on your home market. Indian companies capitalizing a US entity fall under the FEMA Overseas Direct Investment framework, with filings through an authorized dealer bank and an Annual Performance Report each year. Outbound investment from China involves its own filings and foreign exchange approvals. Singapore and Japan are lighter. Check with your finance team before choosing a route, since this can change the timeline significantly.
How Much Does It Cost to Hire a US Employee From Asia?
Salary plus employer-side taxes, which are modest by many standards: FICA at 7.65% plus state unemployment and workers' compensation, both of which vary by state. On top of that sits the cost of your route, either a per-employee EOR fee or the setup and ongoing compliance cost of a US entity, which runs from roughly $5,000 to $40,000 to establish.
How Fast Can a Company in Asia Hire Someone in the US?
Days, through an EOR, once the paperwork is in. Setting up your own US entity and registering as an employer across the relevant states takes weeks to a few months before you can run payroll.
Does the US Employee Need a Visa?
Not if they are a US citizen or already authorized to work in the US and are staying there. You are employing someone who already lives and works in the country, so no immigration process applies. Sponsorship only comes up if you relocate a non-US worker into the US, which is a separate matter.
