10 Questions to Ask Before Choosing an EOR Service

Why Most Companies Ask the Wrong Questions When Evaluating EOR Providers

Most companies evaluating Employer of Record providers focus on surface-level criteria: pricing, country coverage, and brand recognition. These factors matter, but they don't reveal the operational realities you'll face once the contract is signed.

The wrong provider creates compounding problems. Payroll errors trigger employee dissatisfaction and potential attrition. Compliance gaps accumulate into audit risk. Poor support means critical issues sit unresolved for days or weeks. Hidden costs appear months into the relationship, destroying budget predictability.

The right questions expose these risks before they become your problem. They force providers to explain their operational model, reveal how they handle complexity, and demonstrate whether they're equipped for your specific needs.

This guide walks through the 10 most important questions to ask during EOR evaluation. These questions apply whether you're hiring your first international employee or switching from an existing provider that's failing to deliver.

For crypto-native companies, several questions require additional scrutiny. Most legacy EOR providers were built for fiat payroll and bolt on crypto support as an afterthought, creating hidden costs and operational friction. Questions about token compensation and stablecoin payroll capabilities are critical if digital assets are part of your compensation strategy.

TL;DR

Before signing an EOR contract, ask:

1. Pricing transparency — What's included in the base fee vs. charged separately?
2. Statutory costs — Are employer taxes passed through at actual cost with no markup?
3. Contract flexibility — Monthly terms or annual lock-in? Employee minimums?
4. FX methodology — What conversion spreads apply? Stablecoin options available?
5. Support model — Dedicated account manager or ticket-only support? Response times?
6. Compliance ownership — Who owns risk when laws change or errors occur?
7. Onboarding fees — Setup and termination costs per employee?
8. Benefits markup — Pass-through at cost or marked up?
9. Token compensation — Per-event fees or included in base platform?
10. References — Can you connect me with similar companies?

For crypto companies: Questions 4 and 9 are critical. Legacy EORs charge per-event fees for token distributions and treat stablecoin payroll as add-ons, creating hidden costs. Crypto-native providers include these capabilities in the base platform.

Red flags: Pricing opacity, compliance disclaimers, ticket-only support, rigid annual contracts, and token compensation treated as "special projects" should end the conversation.

Bottom line: Transparent providers welcome these questions. Evasive providers deflect. Choose based on operational excellence and strategic alignment, not just headline pricing.

Question 1: What Is Your Actual Per-Employee Monthly Fee, and What Does It Include?

Why this matters: EOR pricing opacity creates budget risk. Providers advertise competitive rates but exclude critical services, leading to surprise charges.

What to ask:

• What is your per-employee monthly fee for each country I'm considering?
• Is this a flat fee or percentage of salary?
• What services are included in the base fee?
• What services cost extra?

What good answers sound like:

Transparent providers give you a clear breakdown: "$599 per employee per month in Germany. This includes employment contracts, payroll processing, statutory benefits administration, compliance management, and platform access. Statutory employer costs like social security contributions are passed through at actual cost with no markup. Non-mandatory benefits are priced separately at cost."

Red flags:

• Vague "we'll provide a custom quote" responses without itemization
• Refusal to disclose what's included vs. extra
• "All-in" pricing that bundles statutory costs without breakdown
• Percentage-of-salary models that penalize salary increases

For crypto companies: Ask explicitly whether token grant administration and stablecoin payroll are included in the base fee or charged per distribution. Legacy providers often charge per-event fees for every token vesting or crypto payout, creating hidden costs.

Question 2: How Do You Handle Statutory Costs, and Are They Passed Through at Actual Cost?

Why this matters: Statutory costs (employer taxes, social security, mandatory benefits) often exceed the EOR fee itself. Some providers mark these up or bundle them opaquely.

What to ask:

• What are the estimated statutory employer costs for my target countries?
• Can you provide an itemized breakdown by category?
• Are statutory costs passed through at actual cost with no markup?
• How do you handle statutory rate changes?

What good answers sound like:

"In France, statutory costs typically run 40-45% of gross salary. We pass these through at actual cost with zero markup. Your invoice will show: social security contributions (X%), unemployment insurance (Y%), pension contributions (Z%), and health insurance (A%). When statutory rates change, we update automatically and notify you in advance."

Red flags:

• Refusal to provide country-specific statutory cost estimates
• Vague "market rates" language without itemization
• Bundling statutory costs into opaque "total cost of employment"
• Markups on government-mandated contributions

Deep dive: Statutory costs vary dramatically by country. Germany runs 18-20%. France exceeds 40%. Understanding these upfront prevents budget surprises and allows accurate cost comparison across providers.

Question 3: What Are Your Contract Terms, Minimums, and Cancellation Policies?

Why this matters: Rigid contract terms eliminate flexibility. If market conditions change or headcount needs shift, locked contracts create sunk costs.

What to ask:

• What are the contract terms - monthly, quarterly, annual?
• Are there employee minimums per country or overall?
• Can I scale up or down without penalties?
• What are the cancellation or offboarding policies?
• Are there early termination fees?

What good answers sound like:

"Month-to-month contracts with no employee minimums. You can scale up or down as needed. Offboarding is included in the base fee with 30 days' notice. No early termination penalties."

Red flags:

• Annual contracts with early termination penalties
• Per-country employee minimums (e.g., "minimum 3 employees per country")
• Minimum monthly spend thresholds regardless of headcount
• Volume discount clawbacks if headcount decreases

Why flexibility matters: Startups need to adapt quickly. Market conditions change. Hiring plans shift. EOR providers that lock you into rigid commitments don't align with startup realities.

Question 4: How Do You Handle Foreign Exchange, and What Are Your Conversion Spreads?

Why this matters: FX fees compound monthly. A 3% spread on $100,000 in annual payroll costs $3,000 - potentially more than several months of base EOR fees.

What to ask:

• What FX rate or conversion spread do you apply?
• Can I fund payroll in local currency to avoid conversion fees?
• Do you support stablecoin payroll options for crypto-native teams?
• How transparent is the conversion rate on invoices?
• Do you offer rate locks or hedging mechanisms?

What good answers sound like:

"We use mid-market rates with a 0.5% spread, clearly disclosed on every invoice. You can fund payroll in local currency if you have multi-currency treasury operations. For crypto-native companies, we support stablecoin payroll on Polygon, eliminating traditional FX fees entirely."

Red flags:

• Refusal to disclose FX spreads or conversion methodology
• Spreads above 2-3% without justification
• No multi-currency funding options
• FX rates buried in fine print

For crypto companies: Traditional wire transfers and currency conversion create 6-7% in combined fees. Stablecoin payroll eliminates these costs through blockchain-based settlement, a significant advantage for distributed teams.

Question 5: What Support Model Do You Use, and How Quickly Do You Respond to Critical Issues?

Why this matters: When payroll breaks, employees don't get paid. Support quality determines whether issues are resolved in hours or weeks.

What to ask:

• Do I get a dedicated account manager or ticket-based support?
• What are your average response times for urgent issues?
• How do you handle payroll emergencies?
• What support channels are available (email, phone, Slack)?
• Do you provide proactive guidance or only reactive support?

What good answers sound like:

"You'll have a dedicated account manager who knows your business. Urgent payroll issues are escalated immediately with <4-hour response times. We provide proactive compliance updates, quarterly reviews, and direct communication channels."

Red flags:

• Ticket-only support with no human escalation path
• Chatbot-first support for complex issues
• Vague SLAs without specific response time commitments
• No dedicated account management even at scale

Reality check: Budget providers offering $200-$400/month typically provide ticket-based support with slow response times. Premium providers at $600-$800/month often include dedicated account management. The cost difference is $2,400-$4,800 annually per employee - worth it if responsive support prevents payroll failures or compliance issues.

Question 6: How Do You Handle Compliance Updates and Regulatory Changes?

Why this matters: Labor laws change constantly. Compliance management requires active monitoring and proactive updates.

What to ask:

• How do you monitor regulatory changes in the countries where you operate?
• Who owns compliance risk - you or me?
• Do you provide proactive updates when laws change?
• What happens if a compliance error occurs?
• How do you handle audits or government inquiries?

What good answers sound like:

"We monitor regulatory changes through local legal counsel in every country. When laws change, we update contracts, payroll logic, and processes automatically. We own compliance risk - if an error occurs due to our failure, we're liable. We'll represent you in audits and provide all required documentation."

Red flags:

• Disclaimers that shift compliance risk back to you
• No proactive notification of regulatory changes
• Requirement to engage separate legal counsel
• Limited liability clauses for compliance failures

Critical distinction: If a provider disclaims liability for compliance failures, they're not truly functioning as an EOR. The entire value proposition is owning legal employer responsibilities and associated risk.

Question 7: What Are Your Onboarding and Offboarding Fees?

Why this matters: Per-employee setup and termination fees compound quickly, especially if you're hiring frequently or managing turnover.

What to ask:

• Is there an onboarding fee per employee?
• What does it include?
• Does the fee vary by country?
• Are there offboarding or termination fees?
• What happens if an employee doesn't join - is the fee refunded?

What good answers sound like:

"No onboarding fees. Setup is included in your first month's service fee. Standard offboarding is included. If termination becomes disputed and requires legal defense, we'll discuss additional support, but amicable exits have no separate charges."

Red flags:

• $500-$2,000 onboarding fees per employee
• Separate termination fees for standard offboarding
• No refunds if onboarding fails
• Opaque "implementation fees" not disclosed upfront

Cost calculation: If you hire 20 employees in a year and pay $500 per onboarding, that's $10,000 - equivalent to 12-16 months of base EOR fees for one employee. These costs matter.

Question 8: How Do You Handle Benefits Administration, and Do You Mark Up Benefits Plans?

Why this matters: Competitive benefits attract talent, but opaque markup models create hidden costs.

What to ask:

• Are mandatory statutory benefits included in the base fee?
• How do you handle non-mandatory competitive benefits?
• Do you mark up benefits plans, or pass them through at cost?
• Can I choose my own benefits providers?
• What's included in your standard benefits package per country?

What good answers sound like:

"Mandatory statutory benefits are included and passed through at cost. For competitive benefits, we offer pre-negotiated packages with transparent pricing. If you prefer, you can select your own providers and we'll administer at cost with no markup."

Red flags:

• 10-15% markups on benefits plans without disclosure
• Forced use of specific benefits providers
• Vague "market-rate" benefits language
• No option for pass-through at cost

Strategic consideration: For early-stage startups, convenience often matters more than customization. Standardized benefits simplify operations. For scaling companies with specific compensation philosophies, pass-through models offer more control.

Question 9: Do You Support Token Compensation and Stablecoin Payroll?

Why this matters: For crypto-native companies, legacy EOR providers create operational friction and hidden costs by treating digital assets as special projects.

What to ask:

• Do you charge separately for token distributions or vesting events?
• Is token grant administration included in your base EOR fee?
• How do you handle tax withholding for token compensation?
• Do you integrate with crypto custodians like Fireblocks or Anchorage?
• Are stablecoin payroll options available without additional fees?
• Do you support RTUs (Restricted Token Units) and vesting schedules?

What good answers sound like:

Token grant administration is included in our base EOR fee - no per-event charges. We automate tax withholding for token income in each jurisdiction, integrate with your custodian for distributions, and support stablecoin payroll a standard payment option. RTUs, vesting schedules, and tax reporting are all built into the platform."

Red flags:

• Per-distribution fees for every token vesting or crypto payout
• Manual spreadsheet-based token administration
• No integration with crypto custodians
• Stablecoin payroll treated as "add-on" with separate fees
• Tax withholding for tokens handled separately or not at all

For crypto companies: Most legacy EORs charge per-event fees for token compensation, creating a disincentive to use the compensation structure your company actually runs on. Crypto-native EOR providers treat tokens and stablecoins as first-class payment types, not bolt-on services.

Question 10: Can You Provide References From Companies Similar to Mine?

Why this matters: References reveal operational realities that sales conversations don't. Companies similar to yours face similar challenges.

What to ask:

• Can you connect me with 2-3 current customers in similar industries?
• Do you have references from companies at my stage (seed, Series A, etc.)?
• For crypto companies: Do you have crypto-native references who use token compensation?
• How do you handle reference requests?

What good answers sound like:

"Absolutely. We'll connect you with three current customers: one in your industry, one at your stage, and one using token compensation. They'll share their experience with onboarding, support quality, and how we've handled complex situations."

Red flags:

• Refusal to provide references
• Only offering case studies or testimonials (not direct conversations)
• References that are 2+ years old
• No references from crypto-native companies (if you're crypto-native)

What to ask references:

• How responsive is support when issues arise?
• Have you experienced any payroll errors or compliance gaps?
• What surprised you (good or bad) after signing?
• Would you choose this provider again?
• For crypto companies: How do they handle token compensation and stablecoin payroll?

Bonus Considerations: Speed, Scalability, and Strategic Fit

Beyond these 10 questions, consider:

Speed to hire: How quickly can you onboard employees in your target countries? Fast EOR onboarding matters if you're racing to fill critical roles.

Scalability: Does the provider's infrastructure support rapid growth, or will you outgrow them quickly? Can they handle 5 employees today and 50 employees in 12 months?

Strategic alignment: For startups, does the provider understand startup realities - fast iteration, limited resources, and evolving needs? Or are they optimized for enterprise customers with different requirements?

Country expertise: Do they have deep operational presence in your target markets, or are they relying on third-party partners? Direct operations typically mean better support and faster issue resolution.

Technology and integrations: Does their platform integrate with your existing HRIS, accounting systems, and communication tools? Poor integration creates manual work and increases error risk.

Red Flags That Should End the Conversation Immediately

Certain responses should disqualify providers instantly:

"We'll provide pricing after you sign." Transparent providers disclose pricing upfront. Opacity signals hidden costs.

"Compliance is your responsibility." If they disclaim compliance ownership, they're not functioning as an EOR.

"We don't support crypto compensation." For crypto companies, this eliminates them immediately. Legacy providers treating digital assets as afterthoughts create operational friction.

"Our support is ticket-only." Ticket-based support with no escalation path fails during critical issues.

"Statutory costs are bundled into our fee." This prevents verification that you're being charged accurately.

"We require 12-month contracts with early termination penalties." Rigid terms eliminate flexibility and create lock-in risk.

How to Evaluate Answers: Look for Specificity, Transparency, and Confidence

Good providers answer questions directly with specifics. Bad providers deflect, use vague language, or promise to "get back to you."

Specific: "Our average response time for urgent payroll issues is 3.2 hours."

Vague: "We respond quickly to urgent issues."

Transparent: "Our FX spread is 0.5% above mid-market rates, disclosed on every invoice."

Opaque: "We use competitive market rates."

Confident: "We own compliance risk. If our error causes a problem, we're liable."

Evasive: "Compliance is a shared responsibility."

Providers confident in their operational model answer questions without hesitation. Providers with gaps deflect, minimize, or promise follow-up that never arrives.

The Cost of Choosing Wrong vs. The Cost of Choosing Right

Choosing wrong creates compounding costs:

• Payroll errors requiring manual correction
• Compliance gaps accumulating into audit risk
• Poor support leaving critical issues unresolved
• Hidden fees destroying budget predictability
• Employee dissatisfaction from payment delays
• Operational friction requiring workarounds

Choosing right delivers compounding value:

• Reliable payroll execution eliminating operational overhead
• Proactive compliance management preventing issues before they occur
• Responsive support resolving problems quickly
• Transparent pricing enabling accurate forecasting
• Employee confidence in compensation reliability
• Fast global expansion without entity setup delays

The cost difference between a $400/month provider and a $600/month provider is $2,400 annually per employee. If the higher-cost provider eliminates compliance risk, prevents payroll errors, provides responsive support, and natively handles token compensation, that premium delivers significant ROI.

For most startups - especially crypto companies - value wins. Operational reliability, compliance confidence, and responsive support matter more than marginal cost savings.

Conclusion: Ask These Questions Before Signing

EOR evaluation determines whether global hiring becomes a strategic advantage or an operational burden. The right questions reveal provider quality, operational model, and alignment with your needs before contracts are signed.

Ask about:

• Transparent pricing and what's included vs. extra
• Statutory cost pass-through without markup
• Flexible contract terms with no rigid minimums
• FX methodology and stablecoin payroll options
• Support model and response time commitments
• Compliance ownership and proactive updates
• Onboarding and offboarding fees
• Benefits administration and markup policies
• Token compensation and digital asset capabilities
• References from companies similar to yours

For crypto-native companies, questions about token grants and stablecoin payroll are critical. Legacy providers bolting on crypto support create hidden per-event fees and operational friction. Crypto-native providers treat digital assets as first-class payment types, not afterthoughts.

The answers to these questions expose operational realities before they become your problem. Transparent providers welcome scrutiny. Evasive providers deflect.

Choose based on operational excellence, compliance confidence, and strategic alignment - not just headline pricing.

Ready to Find an EOR That Answers These Questions Honestly?

Toku provides transparent, startup-friendly EOR services built for companies that value clarity, compliance, and control.

For crypto-native companies, Toku eliminates the token surcharges legacy EORs charge. Stablecoin payroll, token grant administration, and digital asset compliance are included in the platform - not treated as add-ons or special projects.

Talk to Toku About Your Global Hiring Needs