A contractor of record (CoR) is the company that holds the contract with an independent contractor and pays them, while the contractor works for that company's client. The client gets the person's work; the contractor of record holds everything on paper: the contractor agreement, the identity and tax documents, the invoicing and the payments. The client never contracts the individual, and nobody employs them.
Not legal or tax advice. This guide is a plain-language overview of an engagement structure. Classification and cross-border questions have real legal edges, so consult a qualified attorney or CPA before relying on any of this for a particular engagement.
What does a contractor of record do?
When a company works with an independent contractor directly, it carries the whole relationship itself: drafting the contractor agreement, verifying identity, collecting the right tax form, paying an individual (often across a border), and keeping the records straight. With a few contractors in a few countries, that becomes an operations job of its own.
A contractor of record takes that job on. It signs the contractor agreement with the individual, collects and reviews the tax documents, runs the payments and keeps the records. The client holds one commercial contract with the contractor of record and receives one monthly invoice per person. The term comes from the same family as "employer of record", and the one-word difference is the point.
How is a contractor of record different from an employer of record?
| Contractor of record (CoR) | Employer of record (EOR) | |
|---|---|---|
| The person is | An independent contractor | An employee of the EOR |
| Their contract is with | The CoR, as a contractor agreement | The EOR, as their legal employer |
| Payroll, benefits, statutory compliance | None; the contractor invoices and handles their own taxes under their country's rules | Run by the EOR: local payroll, benefits and employment-law compliance |
| Who sets hours, location and tools | The contractor | The client, as with any employee |
| The client holds | One commercial contract with the CoR and one US-dollar invoice per person | A service agreement with the EOR, plus employment costs |
| Fits when | You want a dedicated expert on your team without becoming their employer | You want the person on your org chart, with benefits, equity and set hours, without opening a local company |
Neither is better in general. They solve different problems, and the honest question is which relationship you want with the person. If the answer is an employee in everything but the paperwork, an EOR is the right tool, and contractor of record vs employer of record walks through that choice. If the answer is a dedicated professional on my team who runs their own business, a contractor of record matches the structure to the reality.
Why does it matter when you engage people abroad?
Engaging someone in another country directly makes you, in a small way, a cross-border contracting operation: the agreement, the tax form (a W-8BEN, in the common case), the international payments and the records all land on you. A contractor of record moves that work to a company built for it and keeps the legal relationships clean. The person is contracted to the contractor of record, not to you, so you don't build up contracts with individuals in several countries.
It also keeps the money simple: one US-dollar invoice per person, from one US company.
Does a contractor of record settle whether someone is an employee?
Not by itself. The structure decides who signs the contract; how the work runs decides whether the relationship is really independent. In the US, the IRS looks at who controls how the work is done and who controls the business side, and the Labor Department asks whether the person is really in business for themselves. For someone working abroad, their own country's rules usually apply.
So a contractor of record works when the relationship it describes is real. The client directs the work: the deliverables and deadlines. The contractor decides how to do it, and chooses their own hours, location, tools and equipment. If you want to set someone's hours and supervise how they work, use an employer of record instead.
How does sourceBOLD work as a contractor of record?
sourceBOLD acts as the contractor of record on every engagement. It's part of how we work, not a separate service: we find and vet the person, you pick who joins and direct the work, and we contract and pay them for as long as they stay. That applies to every role we engage, from software developers and data professionals to QA, DevOps and design.
- You sign an MSA and an SOW with sourceBOLD. The Master Services Agreement covers the commercial relationship; a Statement of Work for each person names them, the start date, the deliverables and the monthly Service Fee. That's all you sign to start an engagement, plus a data processing addendum where the law requires one.
- sourceBOLD signs the Independent Contractor Agreement with the contractor. Their contract, which engages them as an independent contractor, is between sourceBOLD and the contractor. You never contract the individual.
- Identity and tax documents are checked before anyone is paid. A government ID and the right tax form (W-9 for US persons; W-8BEN or W-8BEN-E for foreign individuals and entities) are required in our platform, and a contractor without an approved tax form on file cannot be paid.
- Payments wait for your invoice to settle. The contractor is paid in US dollars after your invoice settles. The funding gate enforces this in code: the platform won't send a payment until the invoice it depends on has settled.
From your side, you pay one monthly fee per person, their pay included, with no fee on top of their pay. Expenses you approve in advance are invoiced separately, any sales tax is added to the fee, and the MSA sets out the rest, such as late fees. On paper you have no employment relationship and no cross-border employment exposure, and that structure depends on working with them the way the contracts describe. Day to day, the person is simply on your team, in your tools and joining your standups, with 4 to 8 hours of overlap with the US workday.
When is a contractor of record the wrong fit?
If you want the person as an employee, with your benefits, your equity, set hours and your performance-review ladder, a contractor of record is the wrong structure, and stretching it that far is how classification problems start. Use an employer of record, or employ them directly. We'd rather say that plainly than set up an engagement shaped wrong.
How does it compare with other models?
A contractor of record is one of several ways to add people, and the acronyms are easy to mix up:
- PEO vs EOR vs contractor of record compares every model, including BPO, RPO and HRO.
- RPO vs recruiting agency vs contractor of record explains why we aren't a recruiting agency.
- Staff augmentation vs outsourcing shows where a contractor of record sits between the two.
- What a contractor of record means for independent contractors looks at it from the contractor's side.
In short
A contractor of record holds an independent contractor's agreement and pays them, so the person can work on your team without anyone employing them. It fits when you direct the work and they run their own business; an employer of record fits when you want an employee. For the numbers, what it costs publishes typical starting prices for every role. For the process, how it works goes from scoping to the first standup, and the comparisons set us against specific providers.