Consultants and contractors are used interchangeably to describe employees who work for an organization but are not subject to the different state and federal payroll withholding tax regulations. However, there are several distinctions between the two.
Chart Summary
| CONTRACTOR | CONSULTANTS |
| Hired to advise a company for the duration of a project |
| The period of hire is typically longer |
| An expert with broad industry experience |
Getty images/Moment/ boonchai wedmakawand
Definition
A contractor is any individual or organization engaged on a contract basis to conduct work for another individual or organization. There are several sorts of contractors, but usually, most contractors are Independent contractors who work for the client on just one or few specific tasks for a short period. The contract ends when the job’s done and a pre-determined price is settled.
Consultants are problem solvers who provide professional advice to help organizations improve their processes. Consultants are self-employed experts with several years of experience and significant industry knowledge. They’ll meet with a company to examine what they’re working on and design a strategy to achieve the company’s broad goals in the most efficient way possible. Consultants provide professional advice on how a business’s operations might be improved. Still, they delegate the task of putting that advice into action to individuals in more permanent, hands-on jobs with the organization.
Contractor vs. Consultant
Consultants and contractors are terms that could be used interchangeably –albeit wrongly- to describe individuals who work for a company for a temporary amount of time. Contractors typically charge on an hourly basis. Before beginning a job, they may generate invoices depending on their labor charges.
These words, Contractor and Consultant, have grown muddled through time and are sometimes used interchangeably. Although consultants may be self-employed like contractors, they are typically hired for long-term objectives. Especially when the consultant enters into a contract to provide services required after offering a professional opinion or suggestions on what has to be done, the consultant is said to transform into a Contractor.