Writer, Freelance Jobs
Freelancers and employees may provide similar services to a company, but key differences exist between the two. Being aware of these variations before embarking on a freelance career can help increase chances for success and satisfaction. Let’s take a look at the difference between freelancing and being an employee.
Here are a few things to keep in mind about freelancing:
“Freelancer” Is Another Term for “Independent Contractor”
Just as an organization may hire a caterer for a party or a landscaping company to take care of the grounds, a freelancer is a provider of specific services for a negotiated rate and time period. Typically, both sides sign a contract spelling out details of the arrangement. After the work has been performed, more contractual agreements may be made—or either side may choose to discontinue the working relationship.
Freelancers Must Excel at Looking for Work
Because a freelancer’s career depends on keeping a steady stream of income, she needs to think about future projects while completing the work at hand. As Joe D’Agnese, co-author of The Money Book for Freelancers, explains, “Employees just show up for work every day and keep chipping away at whatever they were working on yesterday. Their goals are long-range: they want to nail a project because they want their bonus or a promotion or whatever.”
“Freelancers want to finish this job so they can get paid. And when they are swamped with work, it’s easy to think short-term. Get this done, get paid. But as soon as that job is submitted, they have nothing ready to do next because they weren’t looking for work while they were busy. As a result, a lot of freelancers suffer a feast-or-famine cycle of income that most employees never experience.”
Freelancers Still Pay Taxes
The government wants the taxes owed on every worker’s earnings in a timely manner. Employers withhold appropriate amounts before issuing paychecks to employees, but freelancers are responsible for paying their own income tax and self-employment tax.
Those freelancing need to be aware that failure to make estimated tax payments each quarter could lead to a hefty penalty come filing time.
Freelancers Don’t Usually Receive Benefits
Similarly, independent contractors typically are responsible for their own medical insurance and retirement plan, and they do not receive paid vacation, maternity leave, holidays, or sick days. Thus, freelancers act as their own HR department and must become adept at financial planning and time-management matters.
Freelancers Have More Freedom
From setting up shop at the local coffeehouse to working after the kids are asleep, freelancers have the type of flexible arrangement employees often envy. This greater level of control can promote a fulfilling work-life balance, making freelancing a rewarding career option for those willing to essentially turn themselves into a one-person business. As D’Agnese summarizes:
“Freelancing is the freedom to succeed wildly, or fail miserably.”