EOR alternatives

If you're working with independent contractors, you don't need an EOR. EORs are built for hiring employees in countries where you have no legal entity—handling payroll, benefits, and employment compliance. Contractors don't need any of that. They handle their own taxes, work for multiple clients, and operate as independent businesses.

This guide shows you how to manage global contractors directly without EOR markups, using contractor management software and direct payment tools.

When an EOR is overkill

Many businesses use EOR platforms for contractors because they don't know there's a better option. They see "global hiring" and "compliance" and assume they need it. But EORs solve employee problems, not contractor problems.

You don't need an EOR if: Your contractors work for multiple clients, not just you. They set their own schedules and use their own equipment. They invoice you for completed work or milestones. They handle their own taxes and don't need benefits. They already have Wise, PayPal, or Payoneer accounts.

Using an EOR for these contractors means paying $49-99 per contractor per month for payroll processing, benefits administration, and employment compliance they don't need. For 10 contractors, that's $490-990/month or $5,880-11,880/year. You're buying employee infrastructure for people who aren't employees.

The alternative is simple: use contractor management software to organize contracts and track payments, then pay contractors directly via their existing payment accounts. No EOR fees. No middleman delays. No unnecessary infrastructure.

The direct-pay stack

Managing contractors directly requires three components: payment tools, contractor management software, and accounting integration.

Payment tools. Use Wise, PayPal, or Payoneer to send money directly to contractors. These platforms support 180+ countries, handle currency conversion at competitive rates, and provide instant or next-day transfers. Contractors already have accounts with these services. You don't need to set up anything new.

Wise is best for international transfers—low fees (0.5-1% of transfer amount), real exchange rates, and fast delivery. PayPal is convenient for smaller amounts and contractors who prefer it. Payoneer works well for contractors in countries where Wise has limited coverage.

Contractor management software. This is where you organize everything. Store contractor profiles, payment details, and tax forms. Generate independent contractor agreements. Create projects with milestones. Approve invoices. Track payments. Maintain an audit trail for accounting.

The software doesn't process payments—it tells you who to pay, helps you track that you paid them, and keeps records. You still use Wise, PayPal, or Payoneer to send money. The software just organizes the chaos.

Accounting integration. At month-end, export payment data to your accounting system (QuickBooks, Xero, etc.). At year-end, generate 1099 forms for US contractors. Everything is tracked and documented for tax purposes.

Contracts and audit trail

Proper documentation is critical when working with contractors. You need clear agreements, tax forms, and payment records.

Independent contractor agreements. These are not employment contracts. They specify the scope of work, deliverables, payment terms, and intellectual property ownership. They clarify that the contractor is an independent business, not an employee. Use templates appropriate for your jurisdiction and have them reviewed by counsel.

Good contractor management software generates these agreements automatically based on project details. The contractor reviews and e-signs. Everything is stored in one place.

Tax documentation. For US contractors, collect W-9 forms (name, address, tax ID). For international contractors, collect W-8BEN forms (certifying foreign status). Store these securely. You'll need them for year-end tax reporting.

Payment records. Maintain a clear audit trail for every payment. Who was paid, how much, when, for what work, via which payment method. Attach payment confirmation screenshots or transaction IDs. Get contractor confirmation that payment was received.

This documentation protects you in audits, disputes, and tax filings. It also makes accounting and tax preparation much easier.

Risks and mitigations

Managing contractors directly is legal and safe if you do it correctly. The main risks are misclassification, poor documentation, and payment disputes.

Misclassification risk. If you treat an employee as a contractor, you can face penalties, back taxes, and legal claims. The test is simple: do they work exclusively for you, follow your schedule, use your equipment, and are integrated into your organization? If yes, they're likely an employee. Use an EOR. If they work for multiple clients, set their own schedule, and operate independently, they're a contractor. Document this clearly.

Documentation risk. Without proper contracts, tax forms, and payment records, you're exposed in audits and disputes. Mitigation: use contractor management software to generate agreements, collect tax forms, and maintain payment records automatically.

Payment dispute risk. Contractors claim they weren't paid, or you claim they weren't paid correctly. Mitigation: use milestone-based payments with clear deliverables. Get contractor confirmation for every payment. Maintain screenshots or transaction IDs.

Currency and transfer risk. Exchange rates fluctuate, transfers fail, or fees are higher than expected. Mitigation: use Wise for international transfers (best rates and reliability). Confirm payment details before sending. Keep contractors informed of transfer timing.

Case examples

Marketing agency with 8 freelancers. Works with designers, copywriters, and social media managers across 5 countries. Each contractor has multiple clients and invoices for completed projects. Previously used Deel at $49/contractor/month = $392/month. Switched to Kontrable at $99/month. Saves $293/month or $3,516/year. Still pays contractors via Wise. Now has organized contracts, milestone tracking, and clean payment records.

Remote startup with 12 contract developers. Building a SaaS product with contractors in 6 countries. Each contractor works 10-20 hours/week on specific features. Previously managed everything in spreadsheets—lost invoices, forgotten payments, chaos at tax time. Switched to contractor management software. Now has automated reminders, organized invoices, and proper documentation. Saves 8 hours/month in admin work.

Production company with project-based crews. Hires 15-20 contractors per project (videographers, editors, sound engineers). Projects last 2-4 weeks. Previously used Remote.com at $49/contractor/month. For a 3-week project with 15 contractors, that's $735 in EOR fees for work that doesn't need employment infrastructure. Switched to direct contractor management. Pays via PayPal and Wise. Saves $636 per project.

The workflow

Here's what managing contractors directly looks like in practice:

Onboarding. Invite contractor to your contractor management platform. They fill out their profile: name, email, payment method (Wise/PayPal/Payoneer), tax information. System generates an independent contractor agreement based on project details. Contractor reviews and e-signs. You're ready to work.

Project setup. Create a project with milestones: "Homepage design - $2,000 - Due Oct 30." Assign contractor. They see the milestone in their dashboard and start work.

Invoice and payment. Contractor completes work and submits invoice. You review and approve. System tells you: "Pay Sarah $2,000 via Wise to sarah@example.com." You log into Wise, send payment, come back and mark "paid" with screenshot. Sarah gets notified and confirms receipt. Status changes to "Complete."

Month-end. Dashboard shows all payments made, pending, and overdue. Export CSV for accounting. Send to your accountant. Done.

Year-end. Generate 1099 forms for US contractors. System pulls all payment data automatically. Review, file, done. Takes 30 minutes instead of 5 hours.

The bottom line

EORs are valuable for hiring employees in countries where you have no entity. But if you're working with independent contractors, you don't need an EOR. Contractors handle their own taxes, work for multiple clients, and don't need employment infrastructure.

The alternative is simple: use contractor management software to organize contracts and track payments, then pay contractors directly via Wise, PayPal, or Payoneer. For 10 contractors, this saves $4,692-10,692/year compared to EOR platforms.

You get better control, faster payments, lower costs, and proper documentation. Your contractors get paid directly without delays. Everyone wins.