Choose an employer of record (EOR) when you want the person to be an employee: set hours, benefits, a permanent place in your company. Choose a contractor of record (CoR) when you want a dedicated independent contractor on your team who decides how, when and where they work, while you set the deliverables and deadlines. The two names differ by one word, and that word changes who the person is legally, what you pay, and how the arrangement ends.
Not legal or tax advice. This guide compares two structures in plain language. Whether a given person is an employee or a contractor depends on the facts and on the law where they work. Get advice from a qualified attorney or CPA for your situation.
What is the difference between a CoR and an EOR?
An EOR employs the person on your behalf. It is their legal employer in their country, runs local payroll, withholds taxes, provides the benefits local law requires, and follows local employment law when the job ends. You direct the person's work much as you would any employee's.
A CoR doesn't employ anyone. It holds a contractor agreement with an independent professional who runs their own business, invoices for their work and pays their own taxes. The CoR collects their tax form and ID, pays them, and keeps the records. You get their work, and you hold one commercial contract with the CoR.
How do they compare?
| Contractor of record | Employer of record | |
|---|---|---|
| The person is | An independent contractor | An employee of the EOR |
| Their contract is with | The CoR, as a contractor agreement | The EOR, as an employment contract |
| Who sets hours, location and tools | The contractor | You, as with any employee |
| What you control | The deliverables and deadlines | The work and how it's done |
| Payroll and benefits | None; the contractor invoices and handles their own taxes, insurance and benefits | Local payroll, statutory benefits, and any extras you add |
| What you pay | A fee per person; with sourceBOLD, one monthly fee with their pay included | The EOR's fee, plus salary and employer costs |
| Ending it | Notice under the contract; with sourceBOLD, 30 days | Local employment law, which can mean notice periods and severance |
| Fits when | You want a dedicated expert on your team without becoming their employer | You want an employee abroad without opening a local company |
What does each one cost?
An EOR's price has three layers. The provider's fee, a fixed monthly amount per employee that several large EORs publish on their pricing pages, is usually the smallest. Then comes the salary, and on top of the salary, the employer's statutory costs in that country. In Mexico, for example, an employer owes a year-end bonus of at least 15 days' pay, a vacation premium, social security and housing-fund contributions, and, in a year the company makes a profit, a share of it. Those costs vary by country and add a large share on top of salary.
A CoR prices differently, because there's no employment to fund. With sourceBOLD, you pay one monthly fee per person, their pay included, with no placement fee; if you later engage them outside sourceBOLD during the MSA or for 12 months after it ends, a non-solicit fee applies. Your one fee is how they're paid, with no fee on top of their pay. Typical starting prices for every role are on what it costs.
Which is safer for classification?
An EOR is the safer choice when the relationship looks like employment, because it is employment. A CoR is the right structure when the relationship really is independent, and it stays right only while it does.
The contract alone doesn't decide this. 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, and some countries presume employment unless the facts show independence. Signs that a relationship is genuinely independent:
- The person chooses their own hours, location, tools and equipment.
- You agree on deliverables and deadlines, and they decide how to meet them.
- They invoice for their work and are registered as an independent business where they live.
- They aren't on your payroll or in your benefit plans.
sourceBOLD's contracts are written around exactly that line. Our MSA says you set the deliverables and deadlines but don't control how, when or where the contractor works, and that you have no employment relationship with them. Our contractor agreement says the contractor decides how to do the work and chooses their own location, hours, tools and equipment. The structure depends on working with them the way the contracts describe.
When is an EOR the better choice?
Use an EOR, or employ directly, when you want any of these:
- Fixed working hours and the right to supervise how the work is done.
- Your company's benefits, equity or bonus plan for the person.
- A permanent role with a career path, performance reviews and promotions inside your company.
- Someone who works only for you and is managed like the rest of your staff.
We'd rather say that plainly than set up an engagement that doesn't match how you want to work. Our comparison with Near, an EOR-based provider, walks through that trade with a specific company.
When is a CoR the better choice?
Use a contractor of record when you want a dedicated remote tech expert on your team, without becoming their employer, and you're comfortable directing the work rather than the person. It also fits when you want to start without employment paperwork in another country, and when you want to be able to end an engagement on 30 days' notice instead of under local employment law.
sourceBOLD finds and vets the person, you pick who joins and direct the work, and we contract and pay them for as long as they stay. Engagements are built to last, with no lock-in: month-to-month, 30 days' notice. 92% of the developers we have placed stayed 12 months or more.
What about the contractor?
The two models are different deals for the person too. An employee through an EOR gets local benefits, paid leave and the protection of employment law, and gives up control of their schedule. An independent contractor keeps control of how, when and where they work, gets paid in US dollars on fixed dates, and pays for their own benefits and taxes. What a contractor of record means for independent contractors looks at it from their side.
In short
An EOR makes the person an employee, with the costs, benefits and termination rules that come with employment. A contractor of record keeps them an independent contractor, priced as one monthly fee, and ends on contract notice. Choose by the relationship you want, then work in a way that matches it. For the wider set of models, see PEO vs EOR vs contractor of record; for our prices, see what it costs.