Freelance and Contract Work

Freelancers are self-employed workers. They have one, two or several clients for whom they complete work. Freelancers are not employees of their clients, and they usually work from either a home office or a rented office, but they can also work at their clients’ offices.

Freelance workers complete specific assignments and they are not guaranteed to be provided work from their clients on a long-term basis.

Freelancers are also commonly referred to as:

  • Independent Contractors

  • Contract Workers

  • Self-Employed Contractors

  • Consultants

Freelancers work independently and charge their clients either by the hour, by the project, or by the day. Sometimes freelancers are assigned to short-term projects that can last as little as a few hours and other times they work for many years with a single client. For more information on the differences between an independent contractor and an employee, visit the Internal Revenue Service website.

Why Would Companies Hire Freelancers Instead of Employees?

To the average person it might seem like freelancers and employees are very similar because they are both paid for completing work. But companies often opt for hiring freelancers because it is not necessary for them to file payroll taxes on behalf freelancers and the company is also not required to provide any type of benefits to freelancers. All in all, freelancers are a less expensive option to companies even if their hourly wage is more than what they would pay an employee because there is no need to pay freelancers for vacation or sick days, retirement plans or healthcare benefits.

 

Advantages of Working as a Freelancer:

  • Work schedules can be flexible.

  • Many expenses that the freelancer incurs can be tax deductible.

  • There is no boss (besides the client) who oversees daily activities.

  • Vacations and time-off can be scheduled at any time.

  • Work can be completed from any location.

  • It is possible to work odd hours.

  • Income can be higher than an employee would earn.

Disadvantages of Working as a Freelancer:

  • Self-employment taxes must be paid.

  • There are no employee-sponsored benefits.

  • Work is not guaranteed to continue.

  • There is often an uneven stream of income.

  • There are not paid vacation or sick days.

  • It is necessary to constantly look for new clients.

  • Job security does not exist.

  • It is often harder to obtain loans, mortgages or credit cards if there is not a history of stable income.

How Does a Person Become a Freelancer?

Becoming a freelancer requires expertise in a particular area. But companies are willing to hire freelancers in many different types of roles. For example, a person can be a freelance secretary or a freelance attorney. Both of these professions have very different educational requirements, but each requires specific types of skills and knowledge.

Many freelancers start out as employees of a company and after gaining ample experience they decide to become self-employed. A person can become a freelancer by applying for jobs labeled as “freelance” or “independent contractor” positions.

Freelancers Can Work With Clients around the World

Because of the Internet, many freelancers are able to obtain clients that are based in other states or countries. As long as it is possible for the freelancer to complete the work from a distance there are no rules or regulations that restrict a resident of one state from freelancing for a company in another city. All proper tax forms must be completed by both parties, but the specific locations within the United States is irrelevant. In fact, many freelancers who work from a distance never meet their clients in person.

Accepting and Rejecting Work

One of the most flexible aspects of working as a freelancer is that any project proposed by a client can be either accepted or rejected. There is no obligation for freelancers to accept work they do not want and there is also not a set rule on how much a freelancer can charge to complete a project. If a freelancer proposes a fee that is too high for the client, the client can simply reject it.

Freelancing is like Running a Business

Working as a freelancer is like running a business. Not only are there accounting issues that must be handled, but a freelancer is responsible for finding and keeping clients. Owning a business is more complex than working as an employee and many freelancers have the “work is never done” attitude because they know that there is always something that can be done to increase productivity and to obtain new and higher-paying clients.

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Written by Melanie Fischer, Career & Job Expert who has been writing professionally for over 10 years.