Hiring your first American is one of the most consequential operational decisions a UK startup makes. Get the structure wrong and you'll spend the next two years unwinding payroll tax exposure, equity grant problems, and benefits headaches.
EOR — the right starting point for most
Employer of Record providers (Deel, Remote, Velocity Global) hire the employee on your behalf in their existing US entity. You pay a flat monthly fee per head, typically $400 to $700, and avoid setting up your own US presence entirely. Best for hires one through five.
PEO — for groups already at scale
Professional Employer Organisations co-employ your staff and require you to have your own US entity. Cheaper per-head than EOR at scale (10+ US employees), better benefits negotiation, but adds entity setup and state registration work upfront.
Direct entity — the long game
A Delaware C-corp subsidiary with state payroll registrations is the right answer once you're committed to a US presence, raising US capital, or planning a flip. Expect $15k to $40k of legal and accounting setup, plus ongoing compliance overhead.
- 1–3 US hires: EOR, no question.
- 4–9 US hires: EOR if remote-distributed, evaluate entity if concentrated in one state.
- 10+ US hires or any equity-heavy roles: direct entity.
- Anyone with ISO grants needs the parent or a US sub — EORs cannot issue qualifying ISOs.