Differences between Contractors, Freelancers, Locums and Consultants

(3 minutes to read)

The terms freelancer, contractor, consultant, temp and locum are frequently used to mean the same thing – but that is not the case. If you are searching for contract roles or unsure how to refer to yourself, our short guide will outline the key differences between these terms.

Freelancer

A freelancer is a self-employed worker who is engaged away from their client’s place of work – usually from home. They tend to work on multiple projects at once, or with significant overlap between their contracts. Engagements are usually shorter-term and payment is on an hourly or per-project basis. Freelance work is particularly common in creative industries – graphic designers, copywriters, ad hoc developers, animators, musicians and producers are more commonly freelancers.

Contractor

A contractor is also a self-employed worker, but tends to be hired for longer-term projects. A client will engage a contractor in order to deliver a particular project or task – the rate is agreed before work begins and typically takes the form of a daily or hourly rate. Unlike freelancers, contractors will work on-site with the client and often have more interaction with people within the organisation than a freelancer would. Since contractors are engaged on a fixed-term basis and don’t have the same benefits as a permanent employee, daily rates can be considerably higher than the equivalent for a permanent worker. Contractors are engaged in all industries, but are particularly common in skilled industries with variable workloads, such as IT, construction or project management.

Consultant

Consultants are highly-skilled professionals who usually have significant expertise in their chosen field. Consultants aren’t hands-on workers, in the same way that a contractor or freelancer might be – instead, they are engaged to assess an entire business or specific section of a business. The consultant will make suggestions and provide guidance to the client at a senior level and often be retained in order to help implement their proposals. Due to the expertise required to consult, a consultant will usually command a very high rate of pay.

Locum

A locum is brought into an organisation to replace absent staff members. Contract length can vary widely – from a few days or weeks, to several months. Locums are often required to cover periods of illnesses, transitional periods after staff move on or maternity leave. The most well-publicised user of locum workers is in the healthcare industry, where locum doctors and nurses are used to provide short-term cover across different areas, but any industry can engage a locum.

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Temp

A temp, or temporary worker, is on a non-fixed term contract. This can be as little as a day or as long as several months. Pay is typically on a pre-agreed hourly rate, although daily rate temp work also exists. Usually, but not exclusively, temp workers are lower-skilled and lower-paid and brought into an organisation to assist with administrative and clerical duties.

Overlap Between Classifications

Although the terms contractor, freelancer, consultant, locum and temp mean different things, there is a certain amount of overlap between them. The long-term goal for many contractors in particular is to become a consultant – once you have the knowledge and experience, the higher rates of pay and broad-level strategic approach are very appealing. As such, some jobs will have elements of contracting and elements of consultancy.

Freelance, temp or locum workers can also be offered longer-term contract roles within an organisation, particularly if they excel or bring useful expertise to a business, above and beyond that which is expected. It’s not uncommon for a worker engaged on a less formal basis to transition into a longer-term contract.

No matter how you are working, Dolan Accountancy specialise in the self-employed market – we have freelancers, contractors, consultants and locums on our books and our expert accountants have decades’ worth of experience in managing the financial affairs of self-employed workers. If you are looking for an accountant or would simply like more information on what we can do for you, please call us on 01442 795 100 or email sophie.lewis@dolanaccountancy.com.

Why Dolan Accountancy?

Dolan Accountancy was set up by Simon J Dolan, the man behind the well-known brand SJD Accountancy. With over 25 years experience in the contracting marketing, Dolan Accountancy has the heritage, reputation and credibility you can trust. Working closely with our sister company, ContractorUmbrella, it means we can offer one low cost, fixed fee package at £95 + VAT per month. This gives you the flexibility of using both our Limited Company Accountancy Services and our award winning Umbrella Service, for one inclusive cost. We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:

  • Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
  • Free use of ContractorUmbrella – With changes in Public Sector IR35 Legislation we understand that sometimes you are required to contract via an umbrella company. We will keep your limited company ticking over, while you work margin free via our sister company, ContractorUmbrella.
  • A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require. We will never outsource work, even to internal teams.
  • Free Access to FreeAgent – The founder behind the multi award winning FreeAgent platform was one of Simon’s first clients, therefore it only seems fitting that we offer all of our clients access to FreeAgent, free of charge.
  • Free Business Banking – We have decided to waive our commission so our clients can use Tide free of charge for the first year.
  • Unlimited IR35 Status Reviews – We will review all of your contracts for IR35 purposes and provide you with our professional opinion as to its status.
  • Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
  • Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax and Dividend advice, to name just a few.

If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.

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