Contractor vs Employee

The distinction between hiring someone as a flexible contractor or as a permanent employee.

Contractors offer flexibility and lower commitment but less control and continuity; employees bring commitment and integration but carry obligations like PAYE, pensions and employment rights. Early startups often mix both, and must classify each correctly for tax and legal reasons.

Examples

A startup uses contractors for design and employs core engineers. — Misclassifying a worker creates legal risk.

How it relates to The Startup Foundry

The Team Report helps you think about team composition as you build an investable company.

Related terms

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