Equity is one of the most effective ways to attract and retain high-caliber engineers. For US startups hiring in Latin America, the challenge isn’t whether to offer it — it’s how to structure it legally and fairly.
That’s where Employer of Record (EOR) models come in. They handle payroll, benefits, and compliance locally, allowing US-based companies to extend equity participation through their parent entity. This article explains how startups can integrate stock options, RSUs, and other equity incentives for nearshore engineers while maintaining compliance under frameworks like Howdy.com’s EOR model.
Why equity matters for distributed teams
Equity connects nearshore engineers to a company’s long-term mission and success. Verified 2025 data from Howdy.com shows that teams offering partial ownership experience higher retention and engagement, especially in Brazil, Argentina, and Colombia.
While annual salaries for developers in Latin America range from $53,000 to $63,000 USD, ownership opportunities strengthen commitment and performance over time. Offering equity helps US startups compete for senior engineers who might otherwise prefer larger, established organizations.
How equity fits within an EOR structure
Under Howdy.com’s nearshore framework, the EOR serves as the legal employer for payroll and compliance but does not issue or hold equity. Equity is granted directly by the US parent company, using one of several common structures:
- Stock options. Typically offered as non-qualified stock options (NSOs) to simplify cross-border taxation.
- RSUs (Restricted Stock Units). Provide ownership at vesting without upfront share purchases.
- Phantom equity or performance bonuses. Deliver financial equivalents of ownership when stock distribution isn’t practical.
This separation ensures that equity remains tied to company ownership, while Howdy’s EOR structure manages payroll, taxes, and benefits locally with full compliance.
Compliance and tax considerations
EOR frameworks like Howdy.com’s ensure engineers are employed legally under local labor laws, while the US entity maintains control over equity administration. Here’s how it works across major nearshore markets:
- Brazil. Payroll taxes such as INSS and FGTS are handled through the EOR. Equity is taxed at vesting.
- Mexico. EORs handle IMSS and ISR filings, while the US parent issues equity as foreign compensation.
- Argentina. USD-denominated equity grants are standard due to inflation; Howdy’s EOR model ensures proper reporting under local tax frameworks.
- Colombia. EORs manage payroll deductions under PILA, while equity is treated as external income.
These structures eliminate the need for local entities while maintaining compliance and accurate tax reporting.
Communicating equity to nearshore engineers
Many nearshore engineers may be less familiar with equity plans than US-based teams. Clear documentation and cultural context matter. Best practices include:
- Explaining vesting schedules and liquidity timelines in both English and Spanish or Portuguese.
- Including an EOR clause in employment contracts that references the separate equity agreement.
- Outlining potential outcomes clearly (e.g., acquisition, IPO, or secondary liquidity).
Transparent equity communication builds trust and reinforces long-term alignment — both cultural and financial.
Why startups choose Howdy.com for equity-integrated hiring
Howdy.com provides a transparent, compliant framework that lets startups combine competitive pay with ownership incentives. By managing payroll, benefits, and compliance through its nearshore EOR infrastructure, Howdy helps companies extend equity without creating local entities.
Teams built through Howdy often evolve from EOR-based to direct employment once startups expand globally — preserving continuity and trust.
For companies scaling engineering capacity in Latin America, this model ensures every developer is both compliant and connected to the business’s long-term goals.
FAQ: Equity and EOR frameworks
1. Can US startups legally offer equity through an EOR? Yes. The US entity grants equity directly, while the EOR — such as Howdy.com — manages payroll and compliance locally.
2. Do nearshore engineers pay taxes on equity grants? Yes, in most Latin American countries. Taxation occurs at vesting or sale, depending on the equity type and local laws.
3. What type of equity works best for global engineers? Non-qualified stock options (NSOs) and RSUs are preferred due to simpler tax implications.
4. How does Howdy.com ensure compliance? Howdy handles payroll and benefits under local labor laws while coordinating with the US parent for proper reporting and documentation.
5. Can equity improve retention in nearshore teams? Yes. Verified Howdy data shows that engineers who receive equity stay with their teams longer and deliver stronger long-term outcomes.
Conclusion
When you’re ready to integrate equity into your nearshore team’s compensation strategy, Howdy.com provides the compliance, transparency, and data to make it happen. Book a demo to see how Howdy enables secure, compliant global hiring.