Employer of Record (EOR) vs setting up your own entity in the Caucasus Region: Which is better?
- Gegidze • გეგიძე | Marketing
- Jul 9
- 8 min read
Table of contents:
Introduction
So, you’re eyeing the Caucasus.
You’ve got a roadmap that points straight to Georgia, Armenia, or Azerbaijan, maybe all three. You know the region’s growing fast, packed with sharp talent, lower costs, and less red tape than the usual suspects in Western Europe.
But now comes the real question:
Do you want to build your own legal entity from scratch? Or would you rather skip the bureaucracy and hire through an Employer of Record (EOR)?
Both options sound fine until they don’t. One is lean and fast. The other gives you full control but loads you with paperwork, compliance, and taxes you never asked for.
This article won’t tell you what to choose in the first paragraph. It’s not that kind of piece.
But if you're serious about scaling in the Caucasus without wasting six figures or ending up in legal quicksand, keep reading.
We'll map out what each path looks like and help you figure out which one fits the team you’re trying to build.
What is an EOR in the Caucasus region?
Picture this:
You find an incredible full-stack dev in Tbilisi. A UI designer in Yerevan who freelanced for a Fortune 500 company. A customer success lead in Baku who’s fluent in English, Turkish, and Russian. You want them on your team. But you don’t want the legal hassle of setting up three companies just to cut their paychecks.
Enter the Employer of Record (EOR).
An EOR in the Caucasus region is your local employment partner that handles the contracts, payroll taxes, social security, and labor law compliance, without requiring you to open a legal entity in Georgia, Armenia, or Azerbaijan.
You keep full control over day-to-day work. They keep your operation clean, legal, and stress-free.
Let’s put it plainly:
If you want to hire talent in the Caucasus without navigating three different bureaucracies and tax codes, you need an EOR.
Benefits of hiring through an employer of record in the Caucasus region
1. One agreement, three markets.
With the right EOR, you can legally employ across all three countries without opening three entities. That’s rare and powerful.
2. Access the regional talent triangle.
Georgia brings remote-first developers and tech PMs with Western startup experience. Armenia adds strong design, engineering, and crypto-native skills. Azerbaijan offers multilingual operators with ties to Turkey and Central Asia. A good EOR opens all of that to you, fast.
3. Cut costs, not corners.
Setting up an LLC in the region might sound cheap, until you factor in lawyers, translations, monthly filings, pension deductions, tax registration, and ongoing admin. EORs wrap this into a fixed monthly fee per employee.
4. Stay compliant with shifting laws.
From Georgian pension contributions to Armenia’s personal income tax, the rules are different in each country. The right EOR tracks them so you don’t have to.
Setting up your own entity in the Caucasus region
Some companies want full control. Own the hiring. Own the payroll. Own the risk.
If that’s you, setting up a legal entity in the Caucasus region might seem like the natural move. Just be prepared: it’s not the same across Georgia, Armenia, and Azerbaijan. Each country brings its own flavor of bureaucracy.
Step 1: Pick your legal structure
You’ll likely go with an LLC, the standard choice for foreign-owned operations across the region. It’s flexible, straightforward, and accepted by all three governments.
Step 2: Register the entity
Here’s where the vibe shifts:
Georgia: This is the easiest. Registration is digital, fast (1–2 business days), and available in English. You can set up remotely — no plane ticket needed.
Armenia: Slower. More forms. Expect physical paperwork and notarized documents. Your Armenian lawyer’s going to earn their keep.
Azerbaijan: The toughest of the trio. You’ll need a local rep, certified translations, and government approvals. Timeline: closer to 2–4 weeks.
Step 3: Set up taxes, payroll, and reporting
Across all three, once you’re registered, you’ll need to:
Open a local business bank account
Register with the tax office
Set up payroll calculations
Handle social security and income tax withholding
File reports monthly or quarterly (depending on headcount and local law)
And yes, you’ll need a local accountant from day one. Each country has its own quirks (Armenia’s thresholds, Georgia’s pension rules, Azerbaijan’s labor inspections), and missing one can cost you.
Cost comparison: EOR vs entity in the Caucasus region
Let’s talk money. Because at the end of the day, all the strategic thinking in the world still has to answer one question: How much does this cost?
Here’s how the Employer of Record (EOR) model stacks up against setting up your own legal entity, in real numbers.
Breakdown: EOR vs Entity in Georgia, Armenia, and Azerbaijan
The short version?
If you’re hiring under 10 people, EOR wins. Every time.
If you’re building a large team (and you love paperwork), entity setup might save you some costs long-term, but it’s slower, riskier, and far more hands-on.
Talent acquisition & payroll in the Caucasus region
If you think the Caucasus is just mountains and wine, you're missing out on its best export: talent.
Georgia gives you senior full-stack engineers with international startup experience. Armenia? A goldmine for French-speaking customer support, IT helpdesk, and QA testers. Azerbaijan? Think oil & gas, fintech, and enterprise ops pros who know their way around high-compliance environments.
Now, how do you tap into all this without building three HR departments and trying to learn three tax codes?
You use an Employer of Record (EOR) in the Caucasus.
Accessing the Talent Pool Without an Entity
With an EOR, you're not just hiring fast, you're hiring smart.
EORs already operate locally in Georgia, Armenia, and Azerbaijan
They handle employment contracts, benefits, and payroll processing under employer of record services in the Caucasus Region
You get legal hires in a few days, not months
Want French-speaking SDRs in Yerevan? Done. A part-time DevOps engineer in Tbilisi? Easy. An oil & gas compliance lead in Baku? You’re covered.
What is an employer of record in the Caucasus Region?
Payroll Processing: EOR vs DIY
With EOR, payroll just works.
With your own entity? You'd better like forms, filings, and tracking pension contributions.
Compliance & legal risk in the Caucasus
Remote hiring in the Caucasus without an Employer of Record is kind of like driving through Tbilisi without Google Maps, plates, or insurance. You might get where you’re going… or you might end up explaining yourself in court.
Let’s keep this simple.
If you don’t have a legal entity in Georgia, Armenia, or Azerbaijan, and you’re hiring people directly, you’re breaking things. Things like:
Labor laws (your contractor might legally count as an employee)
Tax codes (if you’re not contributing to pensions or social funds, someone will notice)
Work status (that lovely contract you sent over? Not valid under local law without registration)
These aren’t theoretical risks. We’ve seen companies get hit with surprise penalties, frozen transfers, and even blacklisted from local hiring boards.
Why an EOR keeps you compliant
An Employer of Record handles all this for you, legally and operationally. That includes:
Drafting compliant local contracts
Registering your employees with the right agencies
Withholding and remitting income taxes
Managing social contributions and pensions
Handling local leave, holidays, and terminations correctly
With an EOR, you don’t need to worry about nuances in Georgian labor law vs Armenian notice periods vs Azerbaijani payroll taxes. It’s all baked into the service.
And the best part? You don’t need to set up a company in each country to do it.
Benefits, workspace & equipment in Caucasus
Let’s say you’ve hired someone in Tbilisi, Yerevan, or Baku. Great.
Now the fun begins.
Where do they work? What are they entitled to? Who buys the damn laptop?
Here’s how it usually shakes out.
Employee benefits when using an EOR
In the Caucasus, labor laws aren’t just for show. Employees expect real things like:
Paid leave (Georgia: 24 days, Armenia: 20+, Azerbaijan: varies but protected)
Health contributions (mostly optional, but becoming common)
Pension & social security (mandatory in all three countries)
A good EOR handles all of this. They don’t just guess what’s required — they follow local law and stay ahead of policy changes. No accidental lawsuits. No missing contributions.
Workspace: remote, hybrid, coworking
Let’s be real: most international hires in the Caucasus are remote. But not everyone wants to work from a kitchen table next to their aunt’s soup pot.
Team Up helps with:
Coworking space access (great for client-facing roles or extroverts)
Stipends for home office setup
Workspace agreements for hybrid teams (some founders like a semi-official presence — we get that)
You pick what works. We make it happen.
Equipment: Who pays for what?
Short answer: the employer.
Longer answer: Through your EOR, we can issue and track:
Laptops
Monitors
Peripherals
Phones if needed
All documented. All tracked. All are compliant with local inventory rules.
You’re not just tossing gear over a border and hoping it lands. You’re building a legitimate setup, backed by contracts and clear policies.
EOR vs PEO in Caucasus Region
If you’re trying to hire across Georgia, Armenia, or Azerbaijan, you’ll eventually run into this question:
Do I go with an Employer of Record (EOR) or a Professional Employer Organization (PEO)?
Let’s get the basics straight.
An EOR hires talent on your behalf. No entity needed. They become the legal employer.
A PEO co-employs your team. But only if you already have a legal entity in that country.
So if you’re entering the Caucasus without an office and without a legal team fluent in Georgian, Armenian, or Azerbaijani law… you already know the answer.
Here’s the side-by-side:
Making the right call
So, what’s it going to be?
If you need to hire fast, stay lean, and keep your overhead low, the Employer of Record (EOR) route is your friend. You get boots on the ground in Georgia, Armenia, or Azerbaijan without opening a local entity, navigating tax registrations, or wrestling with labor contracts in three languages.
But maybe you’re not just dipping your toe in. Maybe you’re going all in. If you want full control, plan to scale aggressively, and are ready to commit to a long-term local presence, setting up your own entity makes sense. It’s slower, sure, but it gives you a tighter grip on operations and payroll.
There’s also a third path: start with EOR, validate the market, build your team, and switch to your own entity later. That’s exactly how many of Team Up’s clients operate; we help you scale today and stay compliant tomorrow.
Conclusion
There’s no one-size-fits-all answer here.
Some companies want speed and simplicity. Others want full control and long-term structure. And if you’ve read this far, you already know what’s at stake — cost, compliance, flexibility, and how much red tape you’re willing to cut through.
So now you’ve got the map.
You can take the EOR route — fast, compliant, and low-lift. Or go all in on your own entity — higher effort, but more control.
Or start with one and shift to the other when you’re ready.
Whatever path you choose, don’t do it blindly.
Talk to Team Up — we help you hire in the Caucasus without the guesswork.
Let’s build your team, your way.
