Consultant and Contractor – What’s The Difference?

Nov 25, 2016
Reading Time: 3 minutes
Written by Carmen Zhu

You may be a small business owner in the process of deciding the next big steps for your brand. Consultants and contractors can help with carrying out tasks tailored to your specific needs. But what are the differences in their roles?

What Is The Difference Between A Consultant and A Contractor?


Put simply, a consultant provides the advice and preliminary guidance in accordance with your needs. This can be advice for areas such as strategy, human resources, software adoption or public relations, usually in regards to a specific project. A consultant could give advice for a business owner to work with a contractor, as part of a broader business plan.


Contractors on the other hand, will be hired to complete a certain service or perform tasks delegated to them. They usually retain more control over their tasks and methods in completing a job. For example, contractors can provide delivery, cleaning, data analysis services.

Contractors can help complete tasks that require specialised skills, which is valuable for startups with limited funds.

If you are looking to hire an independent contractor for your business, when signing up to LawPath you can create a customisable and ready individual contractor agreement or company contractor agreement for free. An individual contractor agreement allows you to engage the services of someone who is an individual (i.e. not a registered company), while a company contractor agreement is used for contractors who are registered companies.

It is also important to include a non disclosure agreement (NDA) to protect your confidential information when using the services of a contractor.

Hiring A Consultant or Contractor

To hire a consultant you create a type of services agreement, called a consultancy agreement. In this agreement, you should provide a detailed description of your business project and the expected responsibilities required from the consultant.

LawPath provides a Consultancy Agreement template which you can use to customise your own contract and this can also be reviewed by one of our experienced business lawyers.

For more information on how to hire a consultant, have a read of our legal guide on this subject.

To hire a contractor, again a written agreement is needed, called a contractors agreement. Lawpath provides a free customisable template for you to use when you wish to engage the services of an independent individual or company contractor.

For more information on hiring a contractor, check out our legal guide on this subject.

Advantages of Hiring Consultants or Contractors

There are multiple reasons for seeking the work of consultants and contractors, to help your business improve and grow.

Some of the key benefits to hiring consultants or contractors are:

  • Outside perspective and analysis – Particularly in situations where you wish to improve an aspect of your business, an independent opinion can be constructively critical. A consultant can help guide you to the direction for success;
  • Specialised knowledge – A consultant can provide more in depth insights into a specific problematic area. A contractor can use their technical and practised skills to actively help your business grow;
  • Cost savings – As an employer, you have an obligation to pay for added employment benefits, such as superannuation to an employee. For both independent contractors and outside consultants these are not required;
  • Flexibility – The term of work designated to a consultants and contractors is usually for a fixed period only and there are no long-term obligations after your contracts expire.


Ultimately, hiring a consultant or contractor may be more practical for helping your business than hiring a new employee. Consultants and contractors are now commonly engaged by employers for their ability to provide specialised skills with greater flexibility and cost savings.

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Looking to hire a consultant or a contractor? Contact a LawPath consultant on 1800LAWPATH to learn more about customising an agreement, obtain a fixed-fee quote from our largest online network of expert lawyers or to get answers to your legal questions.

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