Do I Need a Local Entity to Hire in US Virgin Islands?

In the US Virgin Islands, a "local entity" typically refers to a business structure such as a subsidiary or a branch office that allows you to operate as a recognized employer. This setup is essential for managing local payroll, tax obligations, and employment laws effectively. Without a local entity, you may face challenges in fulfilling these employer responsibilities.

For foreign companies, not having a local entity means you cannot directly hire employees, manage payroll, or comply with local labor laws. However, using an Employer of Record (EOR) can be a viable alternative, allowing you to hire employees without the need for a local business registration.

What is Required to Employ Someone in US Virgin Islands?

• Local employing entity required to directly employ? Yes (you need a local entity for direct employment)
• Payroll registration required? Yes (registration with the Virgin Islands Bureau of Internal Revenue is necessary)
• Withholding/tax remittance required? Yes (employers must withhold income taxes from employee wages)
• Social contributions required? Yes (mandatory contributions to the Virgin Islands Social Security System apply)
• Local employment agreement required? Yes (written agreements are standard practice)
• Mandatory benefits to budget? Yes (statutory leave, health insurance, and other benefits are required)
• Works council/collective agreements considerations? Usually no (not common in the US Virgin Islands)

Best Options If You're Hiring in US Virgin Islands

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should proceed with caution. Hiring contractors in the US Virgin Islands can be a flexible solution, but misclassification risks exist if the contractor performs work similar to that of an employee.

Contractors don’t require a local entity, but ensure that their work arrangement is genuinely independent. Here are some key points to consider:

• Ensure the contractor has control over how they complete their work.
• Limit your oversight to avoid appearing as an employer.
• Clearly define the scope of work in the contract to avoid misclassification.

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 the US Virgin Islands, depending on the type of business and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 1,000–2,500 USD per month (depends on transaction volume)
• Payroll provider: Estimated 100–300 USD per employee per month (depends on payroll complexity)
• Employer registrations and recurring compliance: Estimated 500–1,000 USD per year
• Corporate tax filings and annual reporting: Estimated 1,500–3,000 USD per year (varies by entity size)

EOR cost components (no-entity route):

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

How an Employer of Record Can Help You Hire in US Virgin Islands

Hiring in the US Virgin Islands 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 the US Virgin Islands 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 managed 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.