Your company is in Hong Kong, Singapore or Delaware, and the person you want to hire lives in London, Toronto or Manila. There are three usual ways to do it: engage them as a contractor, have an employer of record employ them for you, or set up your own company where they are. Each works; each has a point where it stops working. This guide explains how they compare and what the official rules in the places we work say, checked in October 2026.
At a glance
| Contractor | Employer of record | Your own company | |
|---|---|---|---|
| Who employs them | Nobody: they run their own business | A provider in their country, on your behalf | Your local company |
| Speed | Days | Usually weeks | Weeks to months |
| Main risk | They are really an employee | Your company can still have a taxable presence there, depending on the role; some countries limit it | Cost and admin of a company you must keep |
| Work visas | Not usually | Restricted in some countries (Singapore, below) | Your company can apply where the rules allow |
| Best for | Genuinely independent, project-based work | One or a few employees in a new country | A team, local sales, or a long-term base |
Contractors: the label doesn’t decide
Every country we work in decides whether someone is an employee by looking at the real relationship, not what the contract calls it.
- United States: “an individual is an independent contractor if the person for whom the services are performed has the right to control or direct only the result of the work and not what will be done and how it will be done.” The IRS looks at behavioural control, financial control and the type of relationship.
- United Kingdom: HMRC says what the parties call the relationship “is not conclusive. … It is the reality of the relationship that matters.” Under the off-payroll rules (IR35), medium and large clients usually decide the worker’s status; for small private-sector clients, the worker’s own company decides.
- Canada: the CRA asks whether it is a contract of service or a contract for service, looking at control, tools and equipment, subcontracting, financial risk, investment and management, and the chance of profit. A business paying a non-resident for services performed in Canada generally withholds 15% of the fees.
- Singapore: status “depends on the actual relationship between you and the company.”
- Hong Kong: “There is no one single conclusive test”; control, tools, own business, profit or loss and other factors are all weighed, and obligations remain “even though the worker is called a contractor or self-employed person.”
A full-time “contractor” who works only for you, on your hours, with your tools, is likely an employee wherever they are, with the back taxes, contributions and employment rights that follow.
Sources: IRS: independent contractor defined · IRS: contractor or employee · HMRC ESM0554 · GOV.UK: off-payroll working (IR35) · CRA RC4110 · CRA: non-resident service fees · MOM: contract of service · HK Labour Department
Employer of record: fast, with two limits
“Employer of record” isn’t a legal term in any of these countries; it is a commercial service. A provider with a company in the worker’s country becomes their employer on paper: it signs the employment contract, runs payroll and pays contributions, and charges you a fee. For one or two people in a new country it is often the quickest legal way to employ someone.
Two limits to know:
- It doesn’t change what the person does for your company. Under tax treaties based on the OECD model, a person who “habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts” on your company’s behalf can create a permanent establishment for your company in that country, whoever employs them. A salesperson closing deals is the classic case.
- Some countries restrict it. Singapore’s Ministry of Manpower says an employer of record that applies for work passes for foreigners based in Singapore who work for overseas companies would be committing an offence; it points to a representative office or a Singapore company instead. Companies not registered in Singapore need a local sponsor to apply for an Employment Pass.
See where is your company really managed? for how permanent establishments work.
Sources: OECD Model Tax Convention, 2017 Update (Art. 5(5)) · MOM: EOR and work passes · MOM: applying for an Employment Pass
Your own company: when it makes sense
A local company costs more to keep, but it is the employer, it can sign local contracts and leases, and it is the clean answer once you have a team, local sales or need work passes. It also makes payroll straightforward:
- UK: HMRC expects an employer with a UK presence, such as a branch, agency or representative office, to run PAYE. Without one, a UK entity the employee works for may have to run it, or the employee may pay National Insurance directly and tax through Self Assessment.
- Canada: a non-resident employer that has to remit payroll deductions should register a payroll account; non-residents working in Canada are subject to the same withholding and reporting as residents.
- Singapore: a Singapore company can apply for Employment Passes for its own staff.
Our guides cover forming one: UK, Singapore, Canada (British Columbia), US and Hong Kong.
Sources: HMRC PAYE81610 (UK presence) · HMRC PAYE81511 · HMRC PAYE20090 (direct collection) · CRA: non-resident employers
A simple way to decide
- Short, defined project; they have other clients; they decide how to do it: a contractor, with a contract that matches reality.
- One or two employees in a new country, no local sales, no work passes needed: an employer of record can be the quickest start.
- A team, a salesperson closing deals, work passes, or a long-term plan: your own company.
An example
Invented for illustration. Mei runs a Hong Kong software company. Her first hire in Singapore is a developer who is a Singapore citizen, so an employer of record employs him while she tests the market. A year later she wants to bring in a sales lead from abroad who will close deals with Singapore clients. That role could create a taxable presence for the Hong Kong company, and the employer of record can’t sponsor a work pass for someone working for an overseas company. She forms a Singapore company, which applies for the Employment Pass and takes over the developer’s employment too.
Hiring in a new country?
Tell us where your company is, where the person is and what they will do. We’ll tell you which route fits, and form the local company when it’s time.
Talk to usFrequently asked questions
What is an employer of record?
A provider with a company in the worker’s country that employs the person on your behalf: it signs the employment contract, runs payroll and pays contributions, for a fee. It is a commercial service, not a legal status defined in most countries’ law.
Is an employer of record better than setting up a company?
For one or two employees in a new country it is usually faster. Once you have a team, local sales staff or need work passes, your own company is usually cleaner, because an employer of record doesn’t remove your company’s own tax exposure and some countries restrict it.
Can I hire someone abroad as a contractor?
Yes, if they are genuinely independent. The US, UK, Canada, Singapore and Hong Kong all look at the real relationship, such as who controls the work, who provides the tools and who takes the financial risk, not what the contract calls it.
Can an employer of record create a permanent establishment?
The employer of record doesn’t, but the work can. Under OECD-model tax treaties, a person who habitually concludes contracts, or plays the principal role in concluding them, on your company’s behalf can create a permanent establishment for your company, whoever employs them.
Can an employer of record sponsor a work pass in Singapore?
Not for someone working for an overseas company. Singapore’s Ministry of Manpower says an employer of record applying for work passes for foreigners based in Singapore who work for overseas companies would be committing an offence.
General information on how hiring across borders works, not legal, employment or tax advice. The rules differ by country and depend on the facts of each working relationship. Confirm your position with a qualified adviser in each country involved.