What is the difference between a contractor, a consultant and an employee?
Consultants are paid as “1099” employees (after the IRS form 1099 for consultants.) Regular employees submit a W-4 IRS form to the employer when they are hired, and their tax return is on Form W-2. There is no legal difference between a contractor and a consultant. If you are a contractor or consultant, basically you are self-employed but sell certain services to someone else, as an individual vendor or a business. You set your own hours, provide your own tools and worksite, pay for your own business expenses including work travel and materials, and direct and schedule your own work, and can build these costs into the consultant rate you charge. If you are an employee, the employer directs and controls your work, provides instructions or training, sets work hours, location, and method of work, reimburses business expenses, provides a written employment contract, and deducts payroll taxes. An employee is an hourly, weekly or salaried employee who works regular hours for a specific emplo
