TL;DR — A remote job offer usually makes you one of three things: an independent contractor, an employee through an employer of record (EOR), or an employee of the company's own entity in your country. Contractors invoice, pay their own taxes and usually get no statutory benefits; employees are paid through payroll with tax withheld and get the protections local law requires. Check which one your contract says before you compare salaries.
Why the contract type matters more than the title
Two offers can show the same monthly number and be worth very different amounts: one is a salary with tax withheld, paid leave and notice rights, the other a contractor fee from which you pay your own taxes, insurance and time off.
For candidates outside the US the question comes up constantly: of the roughly 28,200 postings in our index that stated where they could hire on 13 September 2026, 41.5% listed only the United States. RemoteHunt shows where each employer says it can hire, and our guide to remote job boards for candidates outside the US covers boards that label it.
The three arrangements
| Independent contractor | Employee through an EOR | Employee of a local entity | |
| Who you sign with | The client company, or a provider acting as contractor of record | The EOR's local company or its partner | The company's own entity in your country |
| Contract | Service agreement | Local employment contract | Local employment contract |
| How you're paid | You invoice; paid the gross amount | Salary through local payroll | Salary through local payroll |
| Taxes and social security | You declare and pay them | Withheld through payroll | Withheld through payroll |
| Statutory benefits | Usually none | As local law requires | As local law requires |
| Ending it | As the contract says | Local employment law applies | Local employment law applies |
A contractor of record is a provider that engages contractors on a company's behalf; Deel and Remote both offer one. An EOR does the same for employees, and our explainer on what an employer of record is covers how it works.
What changes for you
Benefits. An employee gets whatever local law requires, plus anything the employer adds. A contractor funds their own paid leave, health cover and retirement savings, so a contractor rate has to be higher than the equivalent salary to come out even; compare offers against salary data by role.
Taxes. Employees have tax withheld through payroll. Contractors usually register, invoice, declare the income and pay social contributions themselves, under their own country's rules.
Notice and termination. An employment contract comes with the notice and dismissal rules of local employment law. A contractor agreement ends on whatever terms it states, which can be short, so read the termination clause.
Equipment. Employers often provide a laptop or a remote work stipend; contractors usually bring their own tools.
Stability. Employment is designed to be ongoing; contract work can end when a project or budget does, on the contract's terms.
US terms: W-2 and 1099
US job ads and recruiters often use tax-form shorthand:
- W-2 role: you are an employee. The employer files Form W-2, the Wage and Tax Statement, for you each year, withholds income tax, Social Security and Medicare from your pay, and pays the employer's matching share.
- 1099 role: you are an independent contractor. The payer reports what it paid you on Form 1099-NEC, which covers nonemployee compensation, and generally withholds nothing. US contractors owe self-employment tax of 15.3% (12.4% for Social Security and 2.9% for Medicare) in addition to income tax.
If you live outside the US and a US company pays you as a contractor, it may ask you for Form W-8BEN instead. The form certifies that you are a foreign person for US tax withholding and reporting, and you give it to the company, not to the IRS. Your own country's tax rules still apply.
Called a contractor, treated like an employee
A label in the contract isn't the final word. The IRS, for example, weighs three groups of facts:
- Behavioral control: does the company control what you do and how you do it?
- Financial control: does it control the business side, such as how you're paid, whether expenses are reimbursed and who provides tools?
- Type of relationship: is there a written contract or employee-type benefits, is the relationship ongoing, and is the work a key part of the business?
Other countries apply their own tests, and the International Labour Organization's Employment Relationship Recommendation (No. 198) addresses contracts written to disguise an employment relationship. If you work fixed hours under close management with no end date but hold a contractor agreement, check your country's rules; you may be owed protections the contract doesn't mention.
Red flags in a contract offer
- Upfront fees. Paying for training, equipment, a "starter kit" or placement is a scam signal. The US Federal Trade Commission (FTC) says honest employers never ask you to pay to get a job.
- A check to deposit and forward. A "company" that sends you a check and asks you to send part of it on, or buy gift cards with it, is running a fake check scam.
- Paying to get paid. Task scams show earnings in an app, then ask you to deposit your own money, usually crypto, to unlock them. Never pay anyone to get paid.
- Job offers by unexpected message. The FTC advises ignoring generic, unexpected texts, WhatsApp or Telegram messages about jobs.
- Strange payment setups. Real companies pay contractors by bank transfer or through established providers such as Deel, Remote or Oyster. Being asked to pay to "activate" a payment account, or to receive money and pass it on, is a warning sign.
Our guide to remote work red flags covers warning signs in listings and interviews too.
Questions to ask before you sign
- Am I being hired as an employee or an independent contractor, and by which legal entity?
- Which country's law governs the contract?
- How, when and in what currency will I be paid, and who covers transfer fees?
- What notice does each side have to give, and what am I paid if the contract ends early?
- Is there an exclusivity, non-compete or intellectual-property clause?
If the answers change what the offer is worth, negotiate; our guide to negotiating a remote salary covers how.
This article is general education, not tax or legal advice. Rules differ by country and change over time, so check your situation against local rules, ideally with a local professional.
Frequently Asked Questions
Is it better to be a contractor or an employee in a remote job?
Employment brings payroll, withheld taxes and the protections local law requires; contracting can bring flexibility and a higher headline rate, but you pay for your own benefits and time off. Compare offers on what you keep, not on the headline number.
What does W-2 vs 1099 mean?
They are US tax forms used as shorthand. A W-2 role is employment with taxes withheld; a 1099 role is contract work reported on Form 1099-NEC, where you pay your own taxes, including self-employment tax.
Why is a US company asking me for Form W-8BEN?
If you live outside the US and the company pays you as a contractor, Form W-8BEN certifies that you are a foreign person for US tax withholding and reporting. You give it to the company, not the IRS, and your own country's tax rules still apply.
Can a company call me a contractor but treat me like an employee?
It can try, but the label isn't the final word: authorities look at who controls the work, who bears the costs and whether the relationship is ongoing and central to the business. If the job looks like employment, check your country's rules.
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