If you're an independent tech professional outside the US (a developer, designer, or a data, QA or DevOps engineer), working through a contractor of record means you sign one contract with a US company, work on a client's team, and get paid in US dollars on fixed dates, while staying independent. The contractor of record holds your contract and pays you; the client gets your work. You keep control of how, when and where you work, and you give up the benefits an employee would get.
I run sourceBOLD, and we act as the contractor of record for everyone who works with our clients. Most articles about this model are written for the companies buying it. This one is for the people doing the work, because a good arrangement has to be a good deal on both sides. One caution first: I'm not a lawyer or a tax adviser, and nothing here is legal or tax advice. Your own country's rules matter, so check them with a professional where you live.
What is a contractor of record?
A contractor of record is the company that holds your contractor agreement and pays you, while you work for its client. With sourceBOLD, your contract is with us, not with the client. The client signs its own agreement with us, sets the deliverables and deadlines for your work, and pays us one monthly fee. We pay you your rate.
That's different from an employer of record, which would make you an employee, with local payroll, statutory benefits and a fixed schedule. With a contractor of record you stay an independent business. The contractor of record vs employer of record guide compares the two in more detail.
What do you gain?
- One US contract instead of many small ones. You don't negotiate terms, chase signatures or argue about payment with each client. Your agreement with us carries over from one engagement to the next, and it doesn't end when an engagement does (it ends automatically if you go 12 months with no engagement).
- Pay in US dollars, on fixed dates. Your monthly rate is paid in two halves: work from the 1st to the 15th is paid on the 20th, and work from the 16th to the end of the month is paid on the 5th of the next month. You send an invoice for each cycle; one that arrives too late for a payment date is paid on the next one, and if a client disputes work in good faith, we can hold back the disputed part until it's resolved and will tell you promptly.
- No chasing clients for money. The client pays us, and we pay you. You never have to send a reminder to the company whose product you're building.
- Real independence. You decide how to do the work, and you choose your own location, hours, tools and equipment. The client sets the deliverables and deadlines; it doesn't set your schedule.
- A rate that only changes in writing. Your rate is in your contract, and it changes only if we both sign an amendment. Clients don't discuss your pay with you; that conversation is between you and us.
- Your own work stays yours. Anything you built before or outside an engagement remains yours. If you use it in a client's project, the client gets a license to use it as part of that work, and you stay free to use it elsewhere.
- Developer-favored economics. The client's one monthly fee is how you're paid, and you pay us nothing to be on our roster.
- Long engagements. Our engagements are built to last. 92% of the developers we have placed stayed 12 months or more.
What do you give up?
Being independent is a trade, and you should see both sides before you sign anything.
- No employee benefits. There's no paid vacation, sick leave, health plan or severance from us or the client. You pay your own taxes and social contributions, and arrange your own insurance and benefits.
- Pay only while you're on an engagement. We don't promise minimum hours or continuous work. Between engagements, nothing is earned.
- You must be set up as a business. Our agreement has you confirm that you're registered as an independent worker or business where you live, and asks you to provide a tax form (usually the W-8BEN outside the US), proof of identity and payment details before your first payment.
- If a client doesn't pay, work pauses. If we don't receive a client's payment for a period, we tell you and suspend the engagement for that period. Work done during a suspended period isn't paid, so stop as soon as we tell you. Work resumes when the client pays, and either of us can end the engagement if the suspension lasts more than 30 days.
- A 12-month restriction. For 12 months after your last engagement ends, you can't work for, or take work from, a company you met or worked with through us, unless we agree in writing. For the same period you can't try to hire our other contractors or staff, though general job advertising is fine. Where your local law requires us to pay compensation for a restriction like this, it applies only if we choose in writing to pay it.
- You do the work yourself. You can't hand it to a subcontractor or give someone else access to client systems without our written consent.
- Currency costs. We pay in US dollars. If your account is in another currency, conversion charges can reduce what arrives.
How is the work protected?
Everything you create for a client belongs to that client as you create it, and you keep its code, data and plans confidential. Those terms are what let a US company trust someone in another country with its repositories, and they're standard in serious contracting work. You can read about the client side of the structure in what is a contractor of record?.
How does it end?
Either of us can end an engagement, or the whole agreement, with 30 days' written notice. You can end it immediately if we're more than 30 days late paying an amount that isn't disputed. We can end it immediately if you break the agreement and don't fix it within ten business days of our written notice, if you break its terms on who owns the work, confidentiality or working with our clients, if you break the law, or if a client asks in writing for you to be removed. An engagement also ends when the client's assignment ends. Nobody is locked in, which is also why long engagements mean something: people stay because the work and the pay are worth staying for.
Is it right for you?
It's a good fit if you want to work with US product teams, prefer contract income in dollars to a local salary, and are comfortable running your own taxes and benefits. It isn't a good fit if you need employer benefits, a guaranteed salary between projects, or the protections your country gives employees. In that case, a job with a local employer, or with a US company through an employer of record, is the better path.
If it does sound right, how we vet candidates explains what we look for and each step before a client meets you. For the buyer's side of the same comparison, there's PEO vs EOR vs contractor of record.