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What’s The Difference Between Contractors, Freelancers and Consultants?

Often, these terms are used interchangeably, however, there are significant differences between the three. To help cut the confusion, this blog post highlights what these differences are.

As a rule of thumb, a consultant is someone who is hired to advise, or consult. This includes a variety of specialist industries and expert level advice.

Contractors and freelancers are usually hired by individuals and other businesses to perform specific types of work. This can be as a one off, or as a recurring service.

Contractors

An individual who carries out work for other people or businesses in return for a fee, usually a pre-agreed hourly rate.

Contractors usually have professional level knowledge in their industry, but this isn’t an essential requirement. The flexible nature of using contractors is sometimes more appealing to clients who do not want to hire someone on a permanent basis.

Due to the temporary nature of contractual work, the client is not required to provide any employee benefits or provide a guarantee of further work. For these reasons, many contractors are able to negotiate a high rate for their services.

Given the nature of the work carried out by contractors, work is usually undertaken at the clients’ premises.

Generally, a contractor will operate as either a sole trader or a limited company, however, it is also possible to have a fixed term contract through a recruitment agency.

Is there a difference between a contractor and a subcontractor?

A contractor provides a service to a client under a set contract for services. A subcontractor provides contractual services to a contractor.

For example, a client hires a contractor to build an extension on their office. This contractor then hires an electrician as a subcontractor to carry out the electrical work. The contractor is responsible for the hiring and payment of the subcontractor.

Consultants

A professional advisor who works as an independent specialist in a specific field. They use their expert knowledge and niche skills to offer advice to other people or businesses in return for a fee.

Usually, the role of a consultant is to solve problems by assessing the current situation and providing an outsider's perspective while offering advice and/or making recommendations for improvements. Typically, the client implements the changes or recommendations themselves.

The consultant is not responsible for carrying out the changes, nor are they responsible for the outcomes of the recommendations.

Consultants are typically held in high regard because they are viewed as the most knowledgeable people in their respective fields. As a consultant, you are able to charge significant fees for your services provided you have the knowledge level expected.

Becoming a consultant takes time to build your reputation and knowledge base. You will also need to carry out continuous development to keep your level of expertise current, and to keep up with emerging trends.

Freelancers

Flexible workers who provide services to several clients at the same time. This is done either through being a sole-trader or working for their own limited company. More often than not, they do not work at the clients’ premises. Communication is usually carried out through email, video conferencing or over the phone.

Depending on your skill level and knowledge, you may be able to offer consultancy services as a freelancer or contractor as part of your client services.

What’s right for me?

The method you decide to use will depend on how you work and the skill level that you possess. But remember, these terms are commonly used interchangeably, so don’t worry if you’ve just found out that you’ve been using the wrong one all this time.

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