Hiring a subcontractor abroad using EOR, AOR, or B2B?

[budgetastronaut]

I run a small UK consultancy through my Ltd and have recently picked up more client work than I can comfortably handle alone. I've collaborated with someone based in the US on a couple of smaller projects before, and they did a great job, so I'm considering bringing them in for this new project. It looks like it could become a long-term arrangement, with them working with me full-time.

My first thought was to bring them in as an independent subcontractor, with their own agreement, insurance, and responsibility for US tax. My client contract has restrictions around subcontracting and access to their data, so I'd need to understand whether that approval would still be required if I used an AOR or EOR instead.

I've also been looking at AORs and EORs. I came across a useful comparison of the two arrangements that helped me understand the basics, but I'm still not sure whether using an EOR would be too much for a consultancy of my size or whether it would actually make life easier in the long run.

I want to grow the consultancy, but I don't want to create payroll or compliance issues in another country just because the first few invoices seem straightforward.

Has anyone here hired someone overseas through their Ltd?

[jamesbrown]

Not to completely dissuade you from a B2B relationship, especially because my experience is in the other direction (i.e. U.S. clients, rather than subbing work to the US), but I think your compliance risk goes to the moon with this approach. You could realistically create a PE or disguised employment from the POV of the IRS, depending on what this subby is doing. Also, you have the dual risk of federal and state laws. Personally, I would look at an EOR or AOR to mitigate your risk. If the relationship is genuinely one of independent contractor, an AOR could make sense, but there are still some significant risks on your end vs. an EOR. But, again, take my advice FWIW, as it is indirect, based largely on what I know from operating in the other direction. This is a perfect situation for seeking proper cross-border legal advice, which may not be cheap, but will avoid bad stuff happening

[budgetastronaut]

I think EOR will be my first option. Thank you!

[courtg9000]

Slightly relevant, slightly off topic.
If you need US/UK specialist tax advice in this country be prepared to pay rather handsomely for it!