In CORE, you can set up different types of consultants as vendors in the Contacts > Vendors screen. We have three types of vendor categories:
- Vendors (typical outside suppliers)
- Contract Employees (1099 employees)
- Outside Consultants (project-based hired consultants)
The difference between an outside consultant and a contract employee is how they are paid by your company. Generally, outside consultants are self-employed, independent people who are hired to provide services on specific projects. They bill you for their time or expenses spent on the assigned projects, making their fee an expense to the project.
On the other hand, contract employees work for you inside or outside your company on a contract basis for a fixed time and price, but are still not on your payroll. They are a direct expense for your business in general and are issued a 1099, whereas an employee gets a W-2. If they are 1099 contract employees, they can work inside or outside the company, but are tracked as a vendor. If they get W2, we track them as an employee (even if they work on a few contracted projects each year).
In CORE, both are considered as a type of vendor, not employee. They are allowed to log time and expense entries in your CORE company, just as employees are. You should not add a contract employee as an employee in CORE. Check out the legal definitions at IRS.gov.
Vendors are typical outside suppliers of goods or services while outside consultants are hired on project-basis. Check CORE Help Center for details.