Freelance vs. self-employed – is there any difference? What exactly do you call yourself when you’re your boss? We broke down the main differences below.
The lines can get a little murky with so many titles for non-traditional workers. Is being self-employed the same as freelance employment? The quick answer is yes, especially in legal standards. However, there are nuances that workers should be aware of.
While all freelancers are self-employed, not all self-employed individuals are freelancers. It may sound complicated, but the key differences are easy to understand.
Working as a freelancer and as a self-employed individual differs in terms of who you work for, what you’re selling, and your commitment to a certain type of work.
To help you overcome identity confusion and properly label yourself, we examined both terms in detail and discussed their five key differences.
In a sense, the core meaning of being self-employed is not being “traditionally employed.” Self-employed individuals are anyone who handles their own business, and as such, they have a great degree of autonomy with their work.
Unlike traditionally employed individuals, self-employed workers get to decide what they work on, which hours they work, and how they work.
While the same may be said about freelancers, self-employed workers have more say in how they operate their businesses. In the battle between freelance vs. self-employed, self-employed workers don’t take instructions from clients.
No one tells them what to do and when to do it. Business owners, entrepreneurs, and startup founders usually fall into this category. Since self-employed workers call the shots, they may enlist the help of employees or freelancers’ help to run their businesses.
Example: Arvin started a social media management start-up and enlisted the help of freelance content creators and ad managers to help him run his business. Arvin gets a say in his workers’ schedules and only works when he needs to.
As their bosses, freelancers are also self-employed. The most remarkable difference between freelance vs. self-employed is that the former can take on multiple jobs from various clients.
Freelancers can swing from client to client, accepting multiple projects at once. At the same time, self-employed workers usually focus on doing the same daily work: running their own business and making money from the services and products they sell.
Unlike self-employed individuals who do not answer to anyone and have complete control over their output, freelancers take instructions from their clients and are accountable for their requests. This means that the client has complete control over how the freelancer’s “product” should look.
Example: Beth is a freelance writer. She has three clients – all requiring a different type of service from hers: web content writing, product description writing, and Facebook community management. Beth’s clients have complete control over how they want her to write.
| Aspect | Freelancer | Self-Employed |
|---|---|---|
| Project Duration | Short-term projects | Both short-term and long-term projects |
| Client Relationship | Multiple clients | Can have multiple clients or a single business |
| Work Structure | Often remote and flexible | Varies widely, can be more structured |
| Income Source | Paid per project or hourly | Revenue from business operations |
| Tax Filing | Files as self-employed | Files as self-employed |
| Identity | Identifies as a freelancer | Identifies as a business owner |
See Related: Freelance Hourly Rate Calculator
Workers can achieve unlimited levels of success by being a freelancer or self-employed workers – don’t let anyone tell you otherwise. It’s easy to see why freelancers get so much flack for how they do business. Here are a couple of reasons.
Brick-and-mortar businesses seem more professional. In essence, freelancers and self-employed individuals are business owners, so why don’t they get the same respect? Some clients hold businesses with a walk-in office to be much more credible than less tangible online businesses – though both are equally valid. Proving that a freelancer’s business is real, even though it’s mainly based online, can be tough.
Anyone can call themselves a business. Today, just anyone can create a website and offer a service. It can be difficult for some clients to distinguish between businesses that are real and those that are just hobbies.
With so many non-professionals diving into the professional marketplace, finding someone devoted to his craft can be challenging.
It’s easier to be a freelancer. It’s easier than ever to offer your services online without needing an office to operate. People who dismiss the efforts of being a freelancer are often those with a more traditional mindset.
They believe a business isn’t official unless it’s brick-and-mortar-based, is completely yours, and you’re not taking client orders. If money is the measure of success, it doesn’t matter if you’re freelancing or self-employed.
There are tens and thousands of freelancers who make much more money than self-employed workers who boast about building their businesses from the ground up. As long as you offer quality service, you’ll find clients lining up at your door.
Workers who call themselves freelancers typically work alone. Self-employed individuals, on the other hand, are more likely to hire employees to help run their businesses. This isn’t because freelancers lack the financial capacity to hire help but because self-employed individuals usually operate in the entrepreneurial field.
While freelancers offer different services to multiple clients, self-employed workers focus on building a business they can call their own. Naturally, businesses of a bigger scale will require the help of others.
To help you better understand this difference, here’s an example. Suzy works as a freelance writer and offers writing services to her clients.
She doesn’t need others’ help to run her business, and her only focus is providing top-quality work. Martin, on the other hand, is self-employed and owns a content writing company.
To offer his services, he enlisted the help of a dozen writers who take on multiple projects every day. This allows him to focus on more growth-oriented aspects of the business, such as sourcing clients, marketing, and advertising.
Regarding being freelance vs. self-employed, freelancers are often relegated to having menial, gig-oriented jobs.
A common perception about freelancing is that it is “less serious” compared to self-employment, as self-employed workers are more entrepreneurial-minded to build businesses from the ground up.
The truth is, you won’t find it difficult to find freelancers who earn a lot more than self-employed individuals. Just because freelancers focus on short-term contracts doesn’t mean they’re less “official” than self-employed workers who run their own businesses.
Ultimately, it’s all about the quality of service you provide and how much you can earn from it.
Unlike traditionally employed individuals who cannot choose who they work with, both freelancers and self-employed individuals enjoy a certain level of control over how they do their work and when they want to do it.
Freelancers can choose how many clients they want to accept and who they want to work with, while self-employed business owners can run their own businesses as they please.
See Related: 5 Powerful Client Facing Skills to Have
Since both titles differ in the clients they cater to, their commitments are also different.
Self-employed workers are committed and loyal to their own businesses, as well as the consumers who patronize their products and service, while freelancers have multiple commitments, drifting from one client to another once a project ends, and another one begins.
In a nutshell, self-employed individuals commit to growing their businesses and pleasing their customers, while freelancers have multiple fleeting commitments with different people at once.
Both freelancers and self-employed individuals handle taxes the same way.
The Internal Revenue Service considers all freelancers to be self-employed, so here’s a self-employment tip: once you start earning income, you must file your taxes as if you own your own business. Freelancers may be required to get numerous 1099-MISC forms for each client they handle.
In addition to paying the regular income tax, both freelancers and self-employed workers are also responsible for paying the self-employment tax of 15.3%.
This tax is paid to your Medicare and Social Security – both of which ordinary employees pay automatically through their paychecks.
This amount also includes the employer portion of your taxes (as a freelancer or self-employed worker, you are considered both an employer and employee.
See Related: How to Get Freelance Clients
Freelancing vs. self-employment: Is there a need to choose between the two? For some workers, freelancing is a gateway to self-employment.
A graphic artist may choose to offer his services in a freelance manner serving many different clients at once with the goals of ultimately setting up his own company in the future and being self-employed.
Some self-employed individuals may also freelance, such as a restaurant owner who offers a freelance restaurant consultancy business to many different clients. You can be one or another, or even both at the same time.
See Related: Can You Do Freelance Work on an H4 Visa?
Let’s face it—the word “freelancer” may offer negative connotations. Some clients picture freelancers as people who float from one job to another without any loyalty or imagine them as entry-level workers fresh out of college with no real experience in what they do.
Still, other people hear “freelancer” and think “unemployed” or imagine them as desperate workers who settle on menial jobs through sites like Fiverr or Upwork for little play.
While these perceptions are ridiculous and ungrounded, it doesn’t change that freelancers are still unfairly pictured as second-class workers.
As such, this may affect how your potential clients see you. Here are some tips on getting your clients to take you seriously.
Last updated: June 19, 2024
