How to migrate off an EOR

You've been using an Employer of Record platform—Deel, Remote.com, or another provider—to manage contractors. You're paying $49-99 per contractor per month, plus transfer fees. You're starting to question whether this expense makes sense.

If your workers are true independent contractors (not employees), the answer is probably no. You can migrate to direct contractor management, save thousands per year, and maintain full compliance. This guide walks you through the practical steps.

Is migration worth it?

Before you commit to migrating, confirm that your workers are actually contractors, not employees. The distinction matters legally and financially.

Contractors work for multiple clients, set their own schedules, use their own equipment, and invoice you for completed work. They handle their own taxes and benefits. If this describes your situation, migration makes sense.

Employees work exclusively or primarily for you, follow your schedule, use your equipment, and you withhold taxes. If you have employees, keep using an EOR or payroll software.

If you're unsure about classification, consult with an employment lawyer. Misclassification creates legal risk, and an EOR provides legal certainty. But if your workers are true contractors, migrating saves real money—often $2,000-10,000+ per year depending on contractor count.

The realistic timeline

A typical EOR-to-direct migration takes 4-8 weeks depending on your contractor count and how complex your documentation is. Small teams with 5-10 contractors can often complete the process in 3-4 weeks. Larger teams or those with contractors in many countries might need 8-12 weeks.

Here's a realistic breakdown:

Weeks 1-2: Planning and setup. Audit your current contractor roster and export all data from your EOR. Choose which payment providers you'll use (Wise, PayPal, Payoneer, or bank transfer). Select a contractor management system—this could be simple (spreadsheet) or more structured (dedicated software). Draft new contractor agreements that establish the independent contractor relationship clearly. Create communication templates for announcement, onboarding, and payment confirmation. These templates help you communicate consistently with all contractors.

Weeks 3-4: Pilot migration. Select 2-3 contractors to migrate first. This pilot phase lets you test your process, identify issues, and refine your workflow before rolling out to everyone. Communicate the change to the pilot group, explaining that they'll be paid directly and why (faster payments, no middleman fees). Collect their new payment details and tax forms. Issue new contractor agreements and have them sign. Process the first direct payment to the pilot group and confirm they received it. Gather feedback and refine your process based on what you learn.

Weeks 5-6: Full rollout. Announce the migration to all remaining contractors. Send onboarding invites to everyone who hasn't migrated yet. Follow up with contractors who don't complete onboarding within a few days. Complete your final payment cycle through the EOR. Confirm all invoices are settled and contractors have been paid.

Weeks 7-8: Transition complete. Process your first full payment cycle using direct payments. Confirm all contractors received their payments successfully. Cancel your EOR subscription. Archive all EOR records for tax purposes (keep them for at least 7 years). Document your new workflow so future contractor hires follow the same process.

Legal and documentation requirements

The most important part of migrating is ensuring your contractor relationships are properly documented. Without good documentation, you expose yourself to misclassification risk and tax compliance issues.

Contractor agreements: You need written independent contractor agreements that clearly establish the relationship. Key elements include scope of work and deliverables (what you expect them to deliver), payment terms and rates (how much and when they're paid), intellectual property ownership (who owns the work they create), confidentiality and non-disclosure clauses (protecting sensitive information), explicit independent contractor status (stating they're not employees), and termination clauses (how either party can end the relationship).

These don't need to be complex legal documents. You can use standard contractor agreement templates and have a lawyer review them once, then reuse them with minor modifications per contractor. The IRS and labor authorities care more that the agreement exists and clearly establishes contractor status than that it's elaborate.

Tax forms: Collect the appropriate tax documentation. For U.S. contractors, collect W-9 forms (name, address, tax ID). For international contractors, collect W-8BEN forms (certifying they're not U.S. persons for tax purposes) or local tax identification documents depending on their country. Store these securely—the IRS requires you to keep them for 7 years.

Payment records: Maintain a complete audit trail of every payment. This includes copies of invoices, payment confirmations from your payment provider (Wise, PayPal, etc.), transfer receipts, and contractor acknowledgment that they received the payment. This documentation protects you if there's ever a payment dispute or tax audit.

Setting up direct payment methods

You'll need to choose which payment methods to use. Most businesses use one or more of these:

Wise is best for international contractors. It has low fees (0.5-1% of transfer amount), fast transfers (1-2 days), and supports 50+ currencies. Most international contractors already have Wise accounts, so setup is quick.

PayPal works well for U.S. contractors and some international contractors. Fees are higher (2.9% + $0.30 per transaction) but transfers are instant or nearly instant. Many contractors find PayPal convenient even if fees are not the lowest.

Payoneer is popular among contractors in Asia, Latin America, and Eastern Europe. Fees are competitive ($5-12 per transfer), and it's useful for contractors who prefer local bank withdrawals.

Bank wire transfers make sense for high-value contractors paying $5,000+ per month. Wire fees are typically $15-40 per transfer, which is expensive for small payments but becomes cost-effective for large amounts.

The best approach is to ask contractors which payment method they prefer. Most already have accounts with at least one of these providers. Offering choice reduces friction during the migration.

Communication strategy

Clear communication is critical to successful migration. Contractors need to understand why you're making the change and what's in it for them.

The announcement should come 2-3 weeks before migration. Keep it simple and positive. Explain that you're moving to direct payments and highlight the benefits: faster payment delivery (1-2 days instead of 3-5), potentially better exchange rates, and a direct relationship without a middleman. Assure them that their work and deliverables won't change. Let them know you'll follow up with detailed onboarding steps soon.

The onboarding invitation comes about 1 week before migration and asks for specific actions. Contractors need to add their payment details (Wise, PayPal, or Payoneer account), review and sign the new contractor agreement, and confirm their tax information. Make this as simple as possible—provide a direct link, keep instructions to 3-5 steps, and give a clear deadline. Offer support (email, calendar link for a call) for contractors who have questions.

Payment confirmation for each payment should include the amount, period covered, payment method, and expected delivery time. Ask contractors to confirm receipt so you know payments arrived. This creates a simple audit trail and reduces payment disputes.

Practical rollout checklist

Use this checklist to track your migration progress:

Export all contractor data from your EOR and review your complete contractor roster. Set up accounts with your chosen payment providers (Wise, PayPal, Payoneer, or configure bank wire). Choose your contractor management approach—spreadsheet, simple database, or dedicated software. Draft your contractor agreement template and have a lawyer review it. Create communication templates for announcement, onboarding, and payment confirmation.

Select 2-3 contractors for your pilot group. Send them the initial announcement. Send them onboarding invites and collect their payment details and tax forms. Process your first direct payment to them and confirm receipt. Gather feedback about their experience.

Refine your process based on pilot feedback. Send the announcement to all remaining contractors. Send onboarding invites to everyone else. Follow up with contractors who don't complete onboarding within a few days. Complete your final payment cycle through the EOR. Confirm all invoices are settled.

Process your first full direct payment cycle. Confirm all contractors received payments. Cancel your EOR subscription. Archive EOR records (keep for 7 years). Document your new contractor workflow.

Common mistakes to avoid

Rushing the migration. Contractors need at least 2-3 weeks notice. Rushing creates confusion, increases misunderstandings about the new payment process, and risks losing contractors who feel blindsided by the change. Give time for questions and transition.

Poor communication. Contractors don't understand why you're making the change if you don't explain it. Focus on the benefits that matter to them: faster payments, no middleman delay, direct relationship with you. Help them understand that this is better for them, not just cheaper for you.

Skipping documentation. Don't cut corners on contractor agreements and tax forms. These protect both you and your contractors. They establish clear expectations and provide documentation if there's ever a dispute or audit. Take time to do this right.

No pilot phase. Always test with 2-3 contractors first. This reveals issues in your process—payment method confusion, missing information, documentation problems—before you roll out to your entire team. Pilots save time overall.

Forgetting about taxes. You'll need to issue 1099 forms to U.S. contractors at tax time. Make sure you're collecting W-9s and tracking payments from the start, not scrambling at year-end.

Frequently asked questions

How long does migration actually take?

Most migrations take 4-8 weeks depending on contractor count and complexity. Small teams (5-10 contractors) often complete it in 3-4 weeks. Larger teams might need 8-12 weeks. The timeline depends more on communication and documentation than on technical setup.

Will I lose contractors during the migration?

Most contractors prefer direct relationships and faster payments. You'll typically retain 95%+ of your contractors if you communicate clearly, give 2-3 weeks notice, explain the benefits, and provide straightforward transition steps. Contractors leave EORs to become freelancers specifically to avoid middlemen, so direct payment is appealing to them.

What happens to pending invoices during the migration?

Complete all pending payments through your EOR before migrating. Don't leave contractors waiting for payment while you're transitioning systems. Once all invoices are settled and confirmed, you can begin the transition to direct payments.

Do I need a lawyer to leave an EOR?

It's wise to have a lawyer review your contractor agreements, especially if you work across multiple countries where employment law varies. But you don't need a custom agreement for every contractor. Have a lawyer review a standard template once, then reuse it with minor modifications. This is much cheaper than having every contract reviewed individually.

Can I migrate contractors gradually?

Yes, and this is often safer. Start with 2-3 contractors as a pilot, refine your process, then roll out to the rest. Gradual migration reduces risk, lets you catch issues early, and reduces the coordination overhead.

What if a contractor prefers to stay with the EOR?

This is rare, but if it happens, you have options. You could keep paying that contractor through the EOR while managing others directly (awkward but possible). More commonly, if a contractor prefers the EOR, it suggests they might not be a good long-term fit anyway. Most contractors want direct payment and faster money.

How do I issue 1099s after migration?

As long as you collected W-9s from U.S. contractors and tracked all payments in 2024, issuing 1099s is straightforward. You report the total amount paid to each contractor in the year. Tax software makes this process simple. The key is collecting W-9s upfront and tracking payments accurately, which your new system should do automatically.

After migration: Staying organized

The real benefit of migrating isn't just the cost savings—it's regaining control of your contractor relationships. Without an EOR mediating everything, you have direct relationships and better visibility.

Keep your contractor database updated with payment methods, tax information, and contract terms. Track invoices and payments carefully. Process payments consistently so contractors know when to expect money. Maintain good communication about project status and payment timing. Keep all documentation organized for accounting and tax purposes.

Your contractor management system (whether spreadsheet or software) is now your source of truth. Keep it organized and current. This makes tax time, audits, and future contractor onboarding much simpler.

The migration is worth it

If your workers are true independent contractors, migrating off an EOR is worth the effort. You save thousands per year, gain direct control of contractor relationships, and maintain compliance with proper documentation.

The migration process takes 4-8 weeks but isn't complicated. The keys are clear communication, proper documentation, and a pilot phase to test your process. Start with planning and setup, move to a pilot with 2-3 contractors, then roll out to your full team.

Most contractors will appreciate the change. Direct payments are faster, you have a more direct relationship, and there's no middleman involved. For you, the financial savings compound over time. Over 5 years with 10 contractors, you save $20,000-50,000 by managing directly instead of through an EOR.

If you're ready to migrate, the hardest part is deciding to start. Once you're committed, the practical steps are straightforward.