Expanding your business to international markets can be an exciting endeavor, but it also involves making critical decisions regarding the best approach to establish your presence in a new country. When considering entering the Turkish market, two common strategies are to use Employer of Record (EOR) services or create a Turkish subsidiary.
In this article, we will explore both approaches (Employer of Record / Subsidiary) and help you determine the right one for your business in the Turkish market.
Approaching the Turkish market with Employer of Record (EOR) Services
Employer of Record services are designed to simplify the process of hiring and managing employees in the Turkish market without setting up a legal entity. Here’s how EOR works and some advantages:
An EOR company in Turkey will legally hire and employ your staff on your behalf. They handle payroll, taxes, compliance with labor laws, and other administrative tasks.
EOR services can be faster and more cost-effective than creating a subsidiary. You can enter the Turkish market quickly without the complexities of establishing a new legal entity.
EOR services ensure that your business complies with Turkish labor laws and tax regulations, reducing the risk of legal issues.
It’s easier to scale up or down with EOR services, making it suitable for businesses with variable workforce needs.
Creating a Turkish Subsidiary
Establishing a subsidiary in Turkey involves setting up a separate legal entity, which is a wholly-owned subsidiary of your parent company. Here are some key points to consider:
Creating a subsidiary provides you with complete control over your operations in Turkey, allowing you to implement your business strategies and brand identity.
A subsidiary is typically considered a long-term investment, and the process can be more time-consuming and costly than using EOR services.
You’ll need to build or acquire local market knowledge, as you’ll be solely responsible for all aspects of your business in Turkey.
Managing compliance with Turkish labor laws, taxation, and other regulations will be your responsibility.
Choosing the Right Approach
The choice between EOR services and creating a Turkish subsidiary depends on various factors:
Market Entry Strategy: If you’re looking for a quick market entry to test the waters in Turkey, EOR services may be the better choice. However, if you plan to establish a long-term presence and have significant operations, creating a subsidiary could be more suitable.
Resource Availability: Consider the resources you have available for market entry. Creating a subsidiary requires a substantial initial investment, while EOR services may require fewer resources.
Risk Tolerance: Assess your risk tolerance. EOR services reduce the risk associated with legal compliance in a foreign market, making them a safer choice for some businesses.
Scale and Strategy: Think about your growth plans. EOR services offer flexibility, but if you have a specific expansion strategy in mind, creating a subsidiary might align better with your goals.
Local Market Knowledge: Do you have in-house knowledge of the Turkish market, or do you need to rely on local experts? Subsidiaries require a deeper understanding of the local market.
Deciding between Employer of Record (EOR) services and creating a Turkish subsidiary is a crucial step in your international expansion journey. Each approach has its own advantages and challenges, and the right choice depends on your business objectives, resources, and risk tolerance. It’s advisable to consult with legal and business experts who specialize in international market entry to make an informed decision that aligns with your strategic goals. Whether you choose EOR or a subsidiary, Turkey’s dynamic market offers ample opportunities for growth and success.
Azkan Group can support you in your Employer of Record (EOR) and payroll requests (also called Umbrella Company) in Turkey. We can manage your HR requests even if you don’t have a legal entity in Turkey.
