Outside consultants and contract employees

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.

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.

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