Do I Need a Local Entity to Hire in Nigeria?

In Nigeria, a "local entity" typically refers to a registered business presence, such as a subsidiary or branch office, that can act as the employer. This setup allows you to comply with local employment laws, manage payroll, and fulfill tax obligations. Without a local entity, you can't legally hire employees directly, as you'll miss out on critical employer responsibilities.

For companies looking to hire in Nigeria without the complexities of setting up a local entity, using an Employer of Record (EOR) is a viable alternative. An EOR can handle payroll, tax compliance, and employment contracts on your behalf, allowing you to focus on your core business activities.

What is Required to Employ Someone in Nigeria?

• Local employing entity required to directly employ? Yes (you need to register with the Corporate Affairs Commission)
• Payroll registration required? Yes (mandatory registration with the Federal Inland Revenue Service)
• Withholding/tax remittance required? Yes (employers must withhold income tax from employee salaries)
• Social contributions required? Yes (employers must contribute to the National Social Insurance Trust Fund)
• Local employment agreement required? Yes (written contracts are standard practice in Nigeria)
• Mandatory benefits to budget? Yes (includes annual leave, sick leave, and maternity leave)
• Works council/collective agreements considerations? Usually (some sectors may have collective agreements in place)

Best Options If You're Hiring in Nigeria

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you must be cautious about misclassification risks.

While hiring contractors in Nigeria doesn't require a local entity, it's crucial to ensure that the contractor operates independently. Misclassifying a contractor as an employee can lead to legal issues, especially if the contractor is integrated into your business operations.

• Ensure the contractor has control over how they complete their work.
• Limit your direction over their hours and methods.
• Be cautious if the contractor's role is central to your business.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Nigeria, depending on the type of business and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 50,000–150,000 NGN per month ($130–$390)
• Payroll provider: Estimated 10,000–30,000 NGN per employee per month ($26–$78)
• Employer registrations and recurring compliance: Estimated 20,000–50,000 NGN per year ($52–$130)
• Corporate tax filings and annual reporting: Estimated 100,000–300,000 NGN per year ($260–$780)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Nigeria

Hiring in Nigeria can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Nigeria quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.