In Core, 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. Contract employees, however, are employees who 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 given a 1099, not a W2. They too can be asked to log time and expense entries in your Core company.