--- title: "Contractor or full-time: what should your first hire be?" description: Hire full-time when the work lasts and needs deep context, like core product or customers. Use a contractor for bounded projects with a clear end date. image: https://funded.club/hubfs/og_image_funded.png --- [![Primary\_logo](https://funded.club/hubfs/Primary_logo.svg)](https://funded.club/) [Book a call](https://funded.club/contact-us) - [Hire](https://funded.club) - [Pricing](https://funded.club/pricing) - [Find a job](https://funded.club/startupjobs) - [Case Studies](https://funded.club/case-studies) - [Locally](https://funded.club/case-studies/locally) - [Supernova](https://funded.club/case-studies/supernova) - [Isolocity](https://funded.club/case-studies/isolocity) - [WeTravel](https://funded.club/case-studies/wetravel) - [Digital Science](https://funded.club/case-studies/digital-science) - [Blog](https://funded.club/blog-results) - [Resources](https://funded.club/resources) - [Predict success](https://signup.predict.ventures/) - [Growth Planner](https://funded.club/growth-planner) - [Glossary](https://funded.club/glossary) - [FAQ](https://funded.club/faq) - [Contact us](https://funded.club/contact-us) [Book a call](https://funded.club/contact-us) - Engagement options: - [Hiring solutions](https://funded.club) - [Pay-as-you-go](https://funded.club/pricing) - Membership plan # Contractor or full-time: what should your first hire be? [Ray Gibson](https://funded.club/blog/author/ray-gibson) Nov 4, 2026, 6:02:49 PM *Updated November 2026* Make your first hire full-time if the work will last and needs deep context about your product and customers, and use a contractor if it is a bounded project with a clear end and a clear spec. Cost matters less than it looks, because a contractor who relearns your product every few months uses founder time that never appears on an invoice. This page decides with two questions, how long the work lasts and how much context it needs, and treats cost as the tiebreaker. Starting from the day rate often leaves a contractor doing compounding work, the costliest mix. ## The two-question test Duration is the easy question. If you can write a true end date into the contract, the work is a project. If the honest answer is "until we stop selling the product", it is a job. Context is the question founders skip. Some work a skilled stranger can do from a good brief; some only gets good once the person knows why your biggest customer churned or why the billing code looks the way it does. QUESTION 1 Will this work still exist in a year? Ongoing, or a project with a real end date? QUESTION 2 Does doing it well need deep context? Your customers, your codebase, the reasons behind past decisions. TIEBREAKER Then compare cost Over twelve months, including your own briefing time. Suggested answers Lasts and needs context Hire full-time Ends and needs little context Contract it Lasts but needs little context Contract now, review in six months Ends but needs deep context Contract, with a founder owning it and a handover What founders miss is that context compounds. Each week a full-time person spends in customer calls and code reviews improves the next week's work, while a contractor is paid for a scope and has little reason to learn the rest of the company. ## Which work suits which Sort your open needs into two lists before you look at a CV. If something sits between them, ask who will fix it at 9pm when it breaks in a year; that person probably belongs on the payroll. Usually fine to contract - A brand identity and launch website - A one-off data migration or integration with a clear spec - A security review or penetration test Usually worth a full-time hire - The core product and the codebase you will build on for years - Anyone who talks to the same customers every week - Whoever owns a number the board asks about One exception: if you cannot yet judge the work, a short contract first teaches you what good looks like and sharpens the later full-time search. ## Worked example: a designer or a backend engineer (illustrative) Daniel has just closed a seed round for a B2B scheduling product. He has budget for one full-time hire this quarter and two needs: a designer to rebuild the brand and site before launch, and a backend engineer to take over the API he wrote himself. DANIEL'S TWO ROLES ON THE TEST (ILLUSTRATIVE SCORES OUT OF 5) Designer: brand and marketing site How long the work lasts2 of 5 Context needed2 of 5 Backend engineer: own the API How long the work lasts5 of 5 Context needed5 of 5 The design work had an end: a brand system, a new site and a small component kit. It needed taste and a clear brief more than product context, so Daniel contracted it and wrote a handover document and two recorded walkthroughs into the agreement. The backend role scored the opposite way. The API would run for the life of the company, every change depended on knowing how customers used it, and each week Daniel spent on fixes was a week not selling. He made it his first full-time hire, using the approach in our guide to [hiring your first developer after funding](https://funded.club/blog/hire-first-developer-after-funding). A year later, design had become weekly work tied to customer feedback, so it moved to the full-time list, and the handover pack gave the new designer a head start. ## Cost, control and classification Compare the options over twelve months, not per week. A contractor's rate looks steep but stops when the project does; an employee gets cheaper per unit of output as context builds. | | Contractor | Full-time employee | | --- | --- | --- | | Best for | Bounded projects with a clear end | Work that compounds: product, customers, metrics | | Ramp-up | Fast on a clear spec, slower each time they come back | Slower at first, faster every month after | | When they leave | Knowledge leaves unless the contract demands a handover | Knowledge stays in the team and the codebase | | Cost picture | Higher rate, no benefits, easy to stop | Salary plus employer costs and equity, slower to change | Add your own time to both columns, since re-briefing a contractor on ongoing work can quietly eat hours a week. The [cost of an empty seat calculator](https://funded.club/cost-of-empty-seat-calculator) puts a figure on waiting for the right full-time person. A NOTE ON CLASSIFICATION Calling someone a contractor in the contract does not settle whether they are one. In many countries, how the work is actually done decides their status, and getting it wrong can land on the company. Rules vary by country and state, so check with an employment lawyer or accountant before you sign, and again if a contract slowly turns into a full-time role. ## Where Funded.club fits When the answer is full-time, we run the search with you. One dedicated recruiter handles it end to end, from sourcing and headhunting through screening and offer support, with first screened candidates within 7 days and an average of 33 days from kick-off to hire. Fees are fixed per hire and agreed upfront. As an illustration, a backend engineer on a $120,000 salary falls in our band up to $150,000, so the fee is $11,500, compared with $24,000 to $30,000 at the 20 to 25% typical of contingency recruiters. See [pricing](https://funded.club/pricing) for every band. ## Frequently asked questions ### Can I start with a contractor and convert them to full-time later? Yes, and it works well when the work proves ongoing and the fit is good. Agree up front that conversion is possible, and take advice on the switch, since the relationship changes in law as well as in practice. ### Should a contractor build my core product? A contractor can build a first prototype, but someone on the team should own the codebase you will build on for years. If a contractor does early work, insist on documentation, clear code ownership and a handover. ### Do I need legal advice to hire a contractor? A short review before your first contract is worth it, because classification and intellectual property rules vary by country and state. Revisit it with an employment lawyer or accountant if the role grows into something ongoing. Worth a brief chat about your next hire? [Book a free call](https://funded.club/contact-us). ## Hiring after a funding round? First candidates in 7 days. Fixed-fee, no commission. [See pricing](https://funded.club/pricing) [Book a free call](https://funded.club/contact-us) [Try the Growth Planner](https://funded.club/growth-planner) [![Primary\_logo](https://funded.club/hubfs/funded-images2022/Primary_logo.svg)](https://funded.club) © 2019-2026 Funded.club B.V. All Rights Reserved. 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