Contractor vs employee structure
Contractor: independent service provider. Files own taxes in their country. No US payroll required. LLC pays based on invoice. Most common for non-resident LLC global teams.
Employee: full-time team member with payroll, benefits, employer tax contributions. US payroll required for US employees. Foreign employees require Employer of Record (Deel, Remote) to handle local compliance.
Paying contractors
- Wise Business: lowest FX (0.4-0.6%), 50+ currencies, fast transfers
- Mercury: USD wire to contractor's US account, ACH to US contractors
- Deel: handles compliance + payments for $49/month per contractor
- Direct bank wire: $30-$50 fees, slower
Employer of Record (EOR) services
- Deel: $599/month per employee (popular for tech teams)
- Remote: $599/month per employee (similar pricing)
- Oyster: similar pricing tier
- Justworks: US-only, lower price
- EORs handle local employment law, benefits, payroll tax in 150+ countries
Tax implications of hiring
Contractor payments deduct as business expenses on pro forma 1120. Each contractor invoices the LLC. US-based contractors paid over $600/year receive 1099-NEC from the LLC at year-end. Non-US contractors typically receive payments without 1099 reporting (LLC just pays per invoice).
What we use
WyomingLLC hires our Dhaka team as contractors. Pay via Wise Business (most cost-efficient). Sign annual contractor agreements. Issue 1099 equivalent forms at year-end. Will move to EOR when we hit 10+ employees in any single country.