A lot of people might confuse the term freelancing and self-employed. Although, they aren’t the same. Both have different meanings. There are various perks to Freelance and self-employment. You can often call yourself self-employed if you own a business.
Freelancers are also self employed people. However, it depends on how you work. Are you working on contracts with different clients or an independent contractors Or trading products?
They offer flexibility and don’t confine you around a desk or chair. This blog post will give you a brief guide on the difference between Freelance and Self-employed.
Are Self Employed People The Same As Freelance?
Freelancers can often be as self-employed, yet self-employed individuals may not be freelancers. Seems confusing, right? Let’s make it clear.
Freelancers often work on contracts, hourly basis, and fixed-priced projects and do freelance work. Moreover, self-employed professionals can be startup CEOs, Entrepreneurs, etc.
According to Oberlo, it is reported that there are over 10 million plus self-employed individuals in the US.
Furthermore, freelancers can also be self-employed professionals if it’s their primary income source and they depend on it.
Let’s hear the significant differences between Freelance vs Self Employed workers, respectively.
Comparison Between Freelance worker vs Self Employed individual
Freelancing, in simple terms, is when you learn a skill and sell it online as a service. You may face several significant phases if you opt to be a sole proprietor. You must learn soft skills such as:
- Selling and Marketing Skills.
- Time Management.
A self-employed individual trades things for a profit, a business owner. Freelancers often don’t need any investment to start working online—a laptop, a desk, and Wi-Fi are all required.
However, to become one of self-employed business owners you’ll need an investment to start part time of full-time business. According to IRS, you are a self-employed worker if you’re working as a sole proprietor or independent contractor and a partner of a trade or a business or running a gig worker.
In addition, freelancers can have employment status in the field such as Writing, Designing, Marketing, etc.
Here are six differences between freelance employment vs self employed:
Freedom of working
You can have your autonomy as a freelance or self employment. Both have their Freedom and own working style. self employed individual can choose what sort of business they want to do and how they want to market them in their style.
Freelancers can set their working hours, work for whomever they like. They work on multiple jobs with multiple clients at once. In contrast to employed individuals, they don’t have this flexibility in their normal life and multiple jobs availability. They have confined the workload, which doesn’t allow them to work on multiple projects.
As a freelancer or self-employed person, you can expand your business. You can hire more employees on fixed salaries and let them carry the workload. In this way, you can hunt for various clients and customers for your business instead of working with one client.
Team work vs Solo Players
Most freelancers are independent worker as compared to self employed workers. Necessarily, freelancers don’t look to build a team like self employed individuals. self employed individuals hire employees to manage stuff in their business. Self employed professionals are more focussed on buiding teams and generting employments.
As mentioned, freelancing doesn’t require many investments, so they are most likely to work alone because they want complete control. Of course, if there is a load of work, they often outsource their work temporarily to other freelance contractors in same niche.
As a self-employed businessman, you’ll need a team behind your back to run your business flawlessly.
self employed individuals looks to build a team with an entrepreneurial mindset. Although, freelancers work on short or long-term contracts for several clients and numerous projects. They don’t need to hire employees to do their work; it’s all digital.
Self-employed individuals tend to become startup founders with a team to compete with other brands. The more employees they have, the more workload they can handle with multiple commitments. Furthermore, freelancers and self employed professionals aim to satisfy their clients and customers.
Also, a self-employed person confesses to investors investing in their business to grow it more efficiently. Although, as a freelancer, you only have to confess to clients to hire you and why client should pay you for your services.
Way of Approach
Both freelance vs self individuals have a different approaches to clients. As mentioned, freelancers apply for jobs on other platforms, such as Upwork, or make their gigs on Fiverr.
Moreover, if you have taken your freelancing journey to the next level, you can also start an agency. As a self-employed person, you will have to market your products or service to gain customer attention, which can generate more leads for your business.
Self Employed individuals and Freelancers Tax
You must be paying taxes, whether you’re a freelancer or a self-employed person. You must register your business to IRS if you have more than $400 net worth in the USA as a freelancer. As said, freelancers can also be self-employed business individuals in the future.
Although, as an employed person, you don’t need to worry about registering because the banks will automatically take the tax. The requirements for self-employed to pay taxes are mentioned above.
Moreover, it can also depend on where you live. As said, it doesn’t matter; you must register once you meet the requirements for filing taxes.
Self-employed individuals are typically responsible for managing and paying their own taxes such as self-employment tax (Social Security and Medicare tax), income taxes, estimated taxes, and other applicable taxes. Freelancers may choose to pay estimated taxes each quarter or have an employer withhold them from each paycheck. Both should also keep in mind the potential benefits of claiming expenses related to their business activities such as office supplies and travel.
Clients and Customers
As said, freelancers are individuals for different clients online. They can work on a couple of projects at the same time. However, as a self-employed person, you can sell your products or service to different customers.
Although, as a freelancer, you can also expand your services by outsourcing your work, and later on, it can diversify into an agency or software hour.
Look at the Advantages and Disadvantages of Both Business Models.
When evaluating a freelancing vs self-employment business model, it is helpful to consider both the advantages and disadvantages of each approach. On the plus side, self-employed individuals have more control over their business operations and are not subject to an employer’s rules or policies.
Freelancers, on the other hand, are typically able to take advantage of access to employee benefits or potentially higher pay without having the hassle of managing taxes or understanding labor laws. However, they also do not have access to protection from legal claims that certain employers provide and may be responsible for finding new project work more often than self-employed individuals.
Freelance or Self-Employment: Which One Fits You?
It depends on your mindset wether you want to be one of self employed people or one of freelancers. Suppose you are a software engineer with great degree and couldn’t find a stable job, then freelancing is the best option to provide services at your own rates. Although, most of the students do freelancing as a part time business.
If you have enough investment in your pocket, you can start a small startup, which ultimately means being self-employed.
Freelance vs. Self-employed might have the same identity, although it depends on how you view it.
In the above blog, we have described the different nuances between Freelance and self-employed. Starting your own business is the best choice if you want a flexible lifestyle and want to be your own boss.
Also, you have to figure out does freelancing or being self-employed fits you. If you want to read more blogs regarding making money and freelancing, make sure to visit Farazdev.com