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Why Do Employers Need EOR For Independent Contractors?

Choosing our SaaS based PEO/EOR Solution enables you to build and manage 100% pure remote teams and expand into new markets 90% faster.

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Running a business enterprise? Thinking of expanding to foreign countries? If the answer is yes, there is a high chance you have already heard of Employer of Record, a third-party solution assisting employers to efficiently handle skilled talents from around the world, on behalf of the company that hired the solution. EORs are designed to make employers’ lives easier with its expertise in managing the workforce smoothly! It is a common misconception that EOR is available ONLY to manage employees. EOR can drive both full-timers and freelancers. Having an employer of record for independent contractors takes your burden of tackling the processes associated with freelancer payments and legal requisites. With the right choice of EOR, you can easily employ freelancers. Let’s better understand how EOR for independent contractors makes you a better employer.

Employment Record for Independent Contractors

Technology advancements, global turnouts and the pandemic that hit the world population recently has greatly impacted the wide acceptance of remote working and has made it possible for anyone to work for anybody from anywhere in the world! People are looking at more creative and flexible ways of working, rather than sitting on a chair, working 9 to 5. Today around 1 billion of the world population is into freelancing, known as independent contractors. Now, coming to EOR or Employer of Record, it is exactly what the term suggests – the recordical employer! The EOR will be legally responsible for employing the workforce on behalf of your enterprise. Officially the employees will be recorded as an employee of the EOR, but in reality, they will work for your enterprise. Thus, an employer of record is a solution by which the employment processes, such as legal formalities and payments, can be outsourced to a third party, the EOR. By bringing an EOR solution to manage skilled independent contractors, you will be able enjoy the benefits of their work, stress-free!

Top Features of an Efficient EOR

To understand EOR, it’s essential to know what features an Employer of Record offers. For an employer, knowing what an EOR can do as a part of freelancer management can be a significant insight.
  • Multilingual contract generation
  • Compliant onboarding
  • Generate freelancer invoice
  • Payment in desired currency
  • Manage expenses and reimbursements
  • Option for local insurance
  • Option to manage regional tax contributions

Advantages of Having an EOR for Subcontractors

Usually, EOR comes into play when expanding business to foreign territories, hiring employees from different countries, or employing independent contractors around the world. What exactly are the advantages of using an EOR to manage subcontractors? Let’s have a look:

Compliance with local rules and regulations

Even though you hire the talents as independent contractors, as an employer, you have the responsibility to comply with local legal requirements. Imagine running your business with all its nuances and, in addition, needing to learn and implement local regulations of each country where you have a business.

It is in this situation that EOR comes to the rescue. The Employer of Record platform takes up the responsibility of handling employment matters and eases your efforts. For every country you hire from, the EOR will have in-built information regarding the laws and regulations, which will automatically apply to the freelancer. And not to worry about the frequent changes that might happen to country labor laws, as the EOR is designed with provisions to get timely updations.

Territorial tax compliance

Independent contractors need to pay taxes for their income, and the employers have certain liabilities. These regulations differ for countries based on their local rules. For instance, in the United States of America, independent contractors need to fill the form W-9, and if the employer pays above a limit, the freelancer must be provided with Form 1099-MISC.

With an EOR, the employer has the option to easily handle these forms and tax regulations effortlessly and efficiently. An EOR has the provision for carrying out the necessary tax forms and their submission on time without fail.

Smooth payroll management

Having an independent contractor payroll software can make the freelancer management go steady. As a growing enterprise, you may employ many freelancers with different paycheck dates. An EOR provides the facility to keep accurate track of these freelancer payments and thus prevent the frequently associated disarrays employers tend to face.

Overseas independent contractor management

Technology has made it possible to employ talents anywhere, anytime! It covers the whole freelancer abroad concept. With the EOR, it’s quite simple to manage and pay a foreign contractor. Whether to keep track of their work submission, due dates, or payment dates, EOR helps you do all these efficiently.

Add-on benefits for freelancers

Some enterprises provide their freelancers with bonuses and commissions and pay for their work-related expenses. Unless following a template, it may cause confusion and discrepancies with the benefits provided. This issue can be avoided with a suitable EOR which will help the employers follow a uniform template for all the benefits and expenses provided across the countries.

Cost effective freelancer management

In addition to all the above advantages, choosing an EOR can be cost-effective. Instead of paying insane penalties and workforce efforts, the process can be simplified with EOR at a simple rate.

Benefits of EOR for Employers

Since we have got a better understanding of the advantages of EOR, let’s glance at the benefits EOR provides employers in the long run.

  • Cost-effective management of freelancers
  • Smooth freelancer onboarding process
  • Save time and efforts of the HRs
  • Business scale-up becomes easy
  • Easy management of laws and regulations
  • Enhance freelancer experience
  • Ensure consistency in providing benefits

Difference Between an EOR for an employee and an Independent Contractor

With the advantages and benefits of EOR for freelancers, we have already seen the various aspects of EOR as a solution. Now the question arises as to how it differs from managing a regular employee.

EOR stands as a link between an enterprise and its workforce, which may include employees and freelancers. The point to note is that an EOR onboards an employee and a freelancer differently as they have different benefits.

We are aware of the employee benefits full-time workers get, such as health insurance, but such benefits are not available for freelancers. This is a significant difference an EOR puts up between an employee and a freelancer. If an employer particularly wishes to provide such benefits to a freelancer, there are EORs which provide the feature through customization.

Next comes the working essentials and laptop. With the right choice of EOR, these assets can be provided to the employees, thus making it easier for the enterprise to handle these supplementary employee benefits. But, this feature too, is absent for freelancers.

A freelancer or contractor is skilled and performs particular tasks for their clients independently. They are running their own business. In contrast, an employee works under the organization. EOR helps to onboard and manage the employees and freelancers but provides different benefits as entitled by the freelancer and employee.

Why Multiplier as your Employer of Record?

On many occasions, enterprises hesitate to hire from foreign countries because of the nuances of setting up local entities. Multiplier’s EOR solution can help you hire the best talent from anywhere in the world and benefit significantly from them through effortless management.

Multiplier acts as the recordical employer of the independent contractors while they work to maximize your profits with smooth working. We manage compliant freelancer onboarding, generate freelancer invoices, pay freelancers in their desired currency, scale up at any point in time and also include the option to provide insurance and benefits at the employers’ discretion. Even cost-wise, Multiplier EOR is effective for its affordability at a $40/freelancer rate.

Are you an employer facing trouble with freelancer management? Sign up with Multiplier for a simple and hassle-free EOR solution for your growing business.

Frequently Asked Questions

Q. How can an employer of record help with employing independent contractors?

An employer of record (EOR) can assist with employing independent contractors by providing compliance assistance, helping with contractor classification, managing contracts, processing payments, offering legal and administrative support, and mitigating risks associated with non-compliance.


Q. What are the legal considerations when working with independent contractors?

When working with independent contractors, some key legal considerations include correctly classifying them as contractors, ensuring compliance with tax laws, understanding intellectual property rights, and having a clear written agreement outlining the scope of work and terms of engagement. It’s important to avoid treating independent contractors like employees to avoid potential legal and tax implications.


Q. How does an employer of record differ from a traditional client-contractor relationship?

The EOR assumes legal responsibility for employment-related obligations, such as payroll taxes and compliance with labor laws. They handle administrative tasks like onboarding, payroll processing, tax withholding, and benefits administration. In a client-contractor relationship, these responsibilities typically rest with the client, and the contractor operates as an independent business entity.

Hiring and onboarding using Multiplier ensures you hire remote talent with locally compliant, fool-proof job contracts, offer emphatic benefits and disburse salaries accurately with absolutely nil errors in payrolls.

Hiring and onboarding using Multiplier ensures you hire remote talent with locally compliant, fool-proof job contracts, offer emphatic benefits and disburse salaries accurately with absolutely nil errors in payrolls.​

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