# Contractor vs employee

Concept · [Talent and hiring](https://ecosystem.samcarlton.com/talent)

Also called: contractor, employee, freelancer, independent contractor, 1099, W-2, agency, dev shop, independent contractor agreement

A contractor is an outside person or firm you pay for a defined piece of work, and they decide how to do it. An employee works for your company on an ongoing basis under your direction. The law treats the two differently for taxes and benefits, and the label you pick does not settle which one a person is. [Common Paper](https://ecosystem.samcarlton.com/common-paper) publishes a free, standard template for hiring a contractor (Independent Contractor Agreement).

**For example:** You pay a freelance [developer](https://ecosystem.samcarlton.com/software-engineer) a [fixed price](https://ecosystem.samcarlton.com/fixed-price-engagement) to build the [first version](https://ecosystem.samcarlton.com/mvp) of your app. That is a contractor. You hire a developer on [salary](https://ecosystem.samcarlton.com/equity-vs-cash) who works your hours on whatever you assign. That is an employee.

## Connects to (16)

- [Scope](https://ecosystem.samcarlton.com/scope): The agreed list of what a project will include and what it will not.
- [Intellectual property](https://ecosystem.samcarlton.com/intellectual-property): Things you create that can be owned, such as code, designs, brand names and inventions.
- [Technical co-founder](https://ecosystem.samcarlton.com/technical-co-founder): A founding partner who can build the product themselves and who makes the technology decisions.
- [Common Paper](https://ecosystem.samcarlton.com/common-paper): A contract company for startups that publishes free, standard agreements anyone may use and modify, along with software for sending…
- [CTO](https://ecosystem.samcarlton.com/cto): Chief technology officer.
- [Recruiter](https://ecosystem.samcarlton.com/recruiter): A person whose job is to find and contact candidates for open roles.
- [Offer letter](https://ecosystem.samcarlton.com/offer-letter): A written job offer to the chosen candidate.
- [Payroll](https://ecosystem.samcarlton.com/payroll): Paying employees on a schedule, and the work that goes with it: withholding income and payroll taxes from each paycheck, paying the…
- [Moonlighting](https://ecosystem.samcarlton.com/moonlighting): Doing paid work on the side, outside a full-time job.
- [Retainer](https://ecosystem.samcarlton.com/retainer): An ongoing services arrangement where a client pays a set amount each month to reserve a provider's time or attention.
- [US Department of Labor](https://ecosystem.samcarlton.com/us-department-of-labor): The federal department for wage earners, job seekers and retirees.
- [Clevyr](https://ecosystem.samcarlton.com/clevyr): A custom software company in Oklahoma City that has worked since 2009.
- [Oklahoma Employment Security Commission](https://ecosystem.samcarlton.com/oesc): The Oklahoma state agency for unemployment insurance and employment services.
- [Fractional executive](https://ecosystem.samcarlton.com/fractional-executive): An experienced leader who works for several companies at once, each for part of the week, usually for a monthly fee.
- [Fractional COO](https://ecosystem.samcarlton.com/fractional-coo): A part-time chief operating officer.
- [Staff augmentation](https://ecosystem.samcarlton.com/staff-augmentation): Adding outside contractors to your own team, usually through a firm, while you keep directing the work.

> This glossary is plain-language orientation, not legal or financial advice. Before you decide on a company structure, a contract, taxes or a fundraising deal, talk with a lawyer or an accountant.

Map view: https://ecosystem.samcarlton.com/contractor-vs-employee