Most companies don't need an Employer of Record. They think they do because they're hiring internationally, but an EOR is specifically for employees—not contractors. If you're working with independent contractors who have multiple clients, set their own schedules, and invoice you for work, you don't need an EOR. You need contractor management.

Here's a simple 5-question framework to figure out what you actually need.

The 5-question check

1. Are you hiring employees or contractors?

You need an EOR if: You're hiring full-time employees who work exclusively for you, follow your schedule, need benefits, and require payroll tax withholding.

You don't need an EOR if: You're hiring independent contractors who have multiple clients, set their own hours, use their own tools, and invoice you for completed work.

2. Do they need benefits and payroll?

You need an EOR if: You need to provide health insurance, paid time off, retirement benefits, and withhold taxes from their paycheck.

You don't need an EOR if: They handle their own taxes, benefits, and insurance. You just pay them for work completed.

3. How many people are you hiring?

You need an EOR if: You're hiring 10+ employees in a country where you don't have a legal entity and don't want to set one up.

You don't need an EOR if: You're working with 5-25 contractors across multiple countries. Direct contractor management is simpler and cheaper.

4. What's your risk tolerance for misclassification?

You need an EOR if: You're worried about misclassification because the person works exclusively for you, follows your schedule, and you control how they work.

You don't need an EOR if: You're working with true independent contractors who have multiple clients, control their own work, and invoice you per project or milestone.

5. Do you need a local entity?

You need an EOR if: You're hiring employees in a country where you don't have a legal entity and don't want to set one up (costs $10k-50k+ per country).

You don't need an EOR if: You're buying services from contractors. No entity required—you're just paying invoices like any other business expense.

Your outcome

If you answered "Yes" to questions 1, 2, and 5:

You need an EOR. You're hiring employees who need payroll, benefits, and tax withholding in countries where you don't have a legal entity.

Next steps: Compare EOR providers like Deel, Remote, Oyster, or Rippling. Expect to pay $49-99 per employee per month plus local employment costs.

If you answered "No" to questions 1 and 2:

You don't need an EOR. You're working with independent contractors who handle their own taxes and benefits. You just need contractor management.

Next steps: Use a contractor management platform like Kontrable to organize contracts, track milestones, and record payments. Pay directly via Wise, PayPal, or Payoneer—no EOR markup.

If you're hiring both employees and contractors:

Use an EOR for employees and direct contractor management for contractors. Don't pay EOR fees for people who aren't on your payroll.

Example: If you have 3 employees in Germany (use EOR) and 8 contractors across 5 countries (use Kontrable), you'll save $392/month vs putting everyone through an EOR.

The cost difference

Here's what it costs to manage 10 contractors via EOR vs direct management:

Method	Monthly Cost	Annual Cost
EOR (Deel/Remote)	$490-990	$5,880-11,880
Kontrable + Wise	$99	$1,188
Savings	$391-891/mo	$4,692-10,692/yr

Common questions

What if I'm hiring both employees and contractors?

Use an EOR for employees (they need payroll, benefits, tax withholding) and direct contractor management for true independent contractors. Don't pay EOR fees for people who aren't on your payroll.

Can I start with contractors and switch to EOR later?

Yes. Many companies start with contractors to test a market, then convert to employees via EOR if they need full-time dedicated staff. Just ensure your contractors are properly classified from day one.

What if I'm not sure about classification?

If someone works exclusively for you, follows your schedule, uses your tools, and you direct their work—they're likely an employee and need an EOR. If they have multiple clients, set their own hours, and invoice you—they're a contractor.

Do I need an EOR for U.S. contractors?

No. U.S. contractors are straightforward: collect a W-9, pay them via ACH/check/Wise, issue a 1099 at year-end. EORs are for employees or complex international situations.

Next steps

If you determined you need contractor management (not an EOR), Kontrable helps you organize contracts, track milestones, record payments, and maintain an audit trail—all for $99/month for up to 25 contractors.

You keep using Wise, PayPal, or Payoneer for payments. We just help you stay organized and compliant without the EOR markup.

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Do you actually need an EOR?