Operations · Article

Hiring Your First Employee vs. Contractor

The practical and legal differences between bringing on an employee and hiring a contractor, and why the distinction matters.

Contractors are simpler to engage — no payroll tax withholding, no benefits obligations — but misclassifying an employee as a contractor to avoid those obligations carries real legal and tax risk. The distinction generally comes down to control: if you dictate how, when, and where the work gets done, that person is likely an employee under most state and federal tests, regardless of what the contract calls them. This is general information, not legal or tax advice.

Related to your launch checklist.