Self Employed vs Freelance: What’s the Difference?
Self employed vs freelance….what’s the difference? These types of contract workers often have a lot in common. They both work for themselves, they often do similar types of work, and they both may not have the security of a regular paycheck. But there are some important distinctions between self-employment and freelancing. Let’s take a closer look at the differences between these two types of work.
What is a Self-Employed Individual?
A self-employed person is someone who works for themselves. They may do similar types of work as freelancers, but self-employment usually means working full time for themselves with a set schedule and a regular workload. Self-employed individuals often own their own business and are responsible for all aspects of that business, from marketing to customer service to accounting.
What is a Freelancer?
Freelancers are contractors who work on an independent basis. They generally take on short-term projects or contracts, and they may not have the same steady income as self-employed individuals. Freelancers also have more flexibility in terms of scheduling and can choose when and where they want to work. They can be hired by businesses as well as individuals, but they may not have the same long-term commitments or obligations that self-employed people do.
Differences Between Self Employed vs Freelance Work
- Freelance work is typically short term, while self-employment can be a longterm career choice
- Self-employed people are their own bosses, whereas freelancers answer to clients.
- Freelancers often have a more project-based work structure, while self-employed people may have more flexible hours but less stability.
- Freelancing can be more isolating, while self-employment can involve working with a team.
- Freelancers usually charge by the hour, while self-employed people may set prices for services or products.
- Self-employment offers tax breaks and opportunities for business growth that freelancing does not provide.
Is freelance considered employment?
Freelance work is not considered employment because it lacks many of the benefits that regular employment offers. Freelancers do not have the same protections as employees, they are not covered by worker’s compensation, and they often do not have access to health insurance or retirement benefits. Additionally, freelancers are not typically protected from discrimination or wrongful termination. This can leave them vulnerable to exploitation and unfair treatment.
Freelancers often have to take on more responsibility than regular employees because they are responsible for all aspects of their work, from finding clients to doing the actual work. This can be a challenge for freelancers who may not have much experience in the field or who don’t possess the skills necessary to complete tasks independently. In addition, freelancers may feel pressure from clients to produce results quickly without taking into account their other commitments such as family or school.
Despite these drawbacks, freelance work can offer flexibility, autonomy, and freedom that is not available when working as an employee. Freelance work allows people to pursue their passions while still making money and developing their skillsets.
Do freelancers have to register as self-employed?
Some freelancers will choose to register their business as an LLC. However, this isn’t mandatory. Regardless, freelancers must pay taxes on the income they earn. But registering your freelancing gig as a business has a few benefits, such as:
- Being able to open a business account
- Building business credit for future loans and mortgages
- Enjoying tax savings
- Separating business and personal finances
- Having more credibility and getting more clients
Can you be self-employed without a business?
According to the IRS, you can be considered self-employed even without an official online or physical store as a business. If you have a full-time job, plus a side hustle, this falls under the self-employed category.
Is it legal to freelance while working full-time?
YES, it’s perfectly acceptable to do freelance work while working a full-time job as long as it doesn’t breach your job’s contract. For example, if you’re doing freelance work during your full-time job’s shift, this could be considered a breach of contract. If you’re also providing the same services your employer’s competitors, this would also likely be in breach of your job’s contract.
Self-Employed vs. Freelance: Which one is better?
There are pros and cons to both self-employment and freelancing, but ultimately, the decision between self-employment or freelancing comes down to what is important to the individual. If someone wants to grow their freelancing gig into a full time, long term career option then self-employment may be a better choice. But if someone wants to take on one-off projects in between their regular work, then freelancing would be a better option.
Self-Employed vs. Freelance: The Bottom Line
So, self employed or freelance? The answer is it depends. Both have their pros and cons, but in the end it comes down to what you want and need from your work situation. Whichever route you choose, make sure you do your research and see what the best fit for your lifestyle is.
If you’re looking for help starting your freelancing journey, be sure to check out our guide on how to become a freelancer in 30 days below.