We have just over twenty remote workers internally and we use a mix. Full disclosure we are a service provider in this space, so I am just taking about what we do internally and freely admit I am biased because of the nature of our business.
1) For short term we engage some folks as independent contractors. They sign a freelance contract, they invoice us each month for their gross earnings and we pay them via international wire transfer. Tax and social security is their responsibility under the contract. We have some contractors who have been on this arrangement more than twelve months and we will try to move them onto employee status this year because of the risk of misclassification. For many tax and labor authorities the contract doesn't matter if they view it as an employment relationship.
2) If we have our own entity incorporated in the country where the worker is (UK, Australia) they sign an employment contract and we pay them through the payroll with full tax and social security contributions & deductions.
3) Where we haven't got our own entity or don't want to run our own payroll yet (USA, Spain, etc)
we use a GEO/Employer of record service. The employee signs an employment contract with the GEO, the GEO invoices us each month for salary + employer costs + their fees, we pay them and they pay the employee.
If you are small or just starting, begin with the first option. It's by far the easiest to administer. Eventually as you get bigger and more stable then you will come to a point contracting alone doesn't work anymore. Then the blended approach has worked very well for us.
