So What’s the Difference Between a Freelancer & an Employee?

Have you ever gotten an offer to do some freelance work, but turned it down because you weren’t sure what you would be getting into as an independent contractor? If you’re considering freelancing, but you don’t really know what to expect, read on. We’ll discuss the differences between an employee and a freelancer.

Voyageur U is here to help you blaze your freelancing trail. The hardest part about striking out on your own is creating a plan. How can you map for a place you’ve never seen? 

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Join Voyageur U now, and you’ll get access to detailed training materials to help map your freelancing course. Get real-world advice with access to our structured community. Other professionals with real-world experience provide the most useful insights.

work and life balance as woman worker debates difference between freelance and employee

What Is The Difference Between a Freelancer and an Employee?

Employees and freelance workers both provide a product or service for an employer or client in exchange for payment. If the product is the same (work), what’s the difference?

Employers have the authority to direct and control the process and product of employees. An employed person works narrowly within the instructions and time frames of the employer. They often don’t have a choice about the specific projects that are assigned to them.

Freelancers and contractors have the freedom to complete work their own way with little instruction from the client. As long as the contract is completed within the given time frame, the freelancer can choose their own methods to accomplish the task. 

The Times are Changing!

Traditionally, people have believed that being an employee is a “better” choice than striking out on their own. Through the second-half of the 20th century, employers lured highly-valued employees with a slew of benefits, from retirement perks to health care to free food.

But things have changed. Employers no longer expect an employee to stick around for 45 years till retirement. The typical benefits that employers have offered are not a given these days.

As recent times have shown us, a steady paycheck can quickly become a furlough. Adaptability is a stronger indicator of success than loyalty to a company.

The quality of employee benefits also continue to decline. Healthcare costs have risen, forcing many HR departments to sacrifice quality plans for lower costs. Employers may choose a plan that doesn’t work for your family.

The bottom line: the stability that was once synonymous with full-time employment is no longer the norm. Today’s worker must be adaptable and continuously moving forward in order to truly achieve financial security.

Employee Benefits Package document on an office desk

Benefits of Full-Time Employment

There are some companies that continue to offer traditional benefits with full-time employment. Healthcare options and retirement benefits are the most common, but there are others, too.

This bundle of perks can make employees intimidated to venture out on their own. They might wonder how they will replace these advantages when they go independent. 

Don’t let these benefits bind you to a job that doesn’t fulfill you! There are other options (scroll down to get right to them and skip the stuff you already know).

OK, so what are those benefits that so often convince full-time employees to work a job that doesn’t make them happy?

  • Health Insurance. Very few people can afford to go without health insurance. Employers are required to provide a health insurance option if they have at least 50 full-time employees. They have the advantage of buying in bulk, resulting in a better rate than you might find on your own.
  • Retirement Plans. Some employers provide a retirement account with their employee benefits. These plans are generally funded with your own money, deducted from your paycheck.
    Some employers put additional funds into your retirement account, matching some or all of your own contributions. That is free money, but those funds aren’t yours until you’re vested. You might need to stay three, five, or even ten years before that money belongs to you.
  • A Steady Paycheck. Employees can expect to be paid on a regular, predetermined basis. If your employer pays you an hourly rate, you’ll know exactly how much income you’ll receive. 
  • Paid Time Off. Employers commonly provide X number of days for you to be out of the office but still get paid. You can’t duplicate this one on your own. 
  • Tax Withholding. Once you’ve completed a single form (the W4), your employer handles your tax withholding. You will need to manage this task if you go out on your own.
  • Security. For the most part, working at one company translates to a steady paycheck. 
  • The little things. You may not think of the pen you use or the paper in the copier as a job benefit, but freelancers pay from their own pockets for office supplies. 

man working on laptop on a beach

The Benefits of Freelancing

It is frequently simpler, more profitable, and safer to work as an employee than it is to strike out on your own. And yet more and more people choose the freelancing path every day.

Why is that? 

Here are some of the things you get when you choose to be your own boss:

  • Variety. Working at a full-time job can mean a lot of repetition. This variety is a big difference between freelancing and being an employee. Freelancers choose what projects they are willing to take. If they want to branch into a new area, they don’t need anyone’s approval. 
  • Flexibility. Working for yourself means not worrying about getting approval from the human resources department if you need the afternoon off. If you do your best work at your kitchen table at midnight, you’re free to manage your schedule that way. 
  • Freedom. Or, perhaps control would be a more accurate word. As a freelancer, you have control over what work you’ll take, when you’ll complete it, and how much you’ll be paid for it. 
  • Portability. When you’re your own employer, you don’t have to worry about finding a job if you relocate.
  • You can be picky. Another difference between freelancers and employees: employees don’t get to turn down unappealing assignments. As a freelancer, you can fill your schedule with only the most interesting and lucrative jobs. The flip side of that: if you are just starting out, you may have a schedule full of less-desirable work. 
  • The sky is the limit. Some people choose to go out on their own because they get tired of working to make someone else rich. When you work for yourself, you don’t have to share your profits with anyone.
  • Balance. At what point did we decide all employees should work eight hours a day, five days a week? Many employers require that time commitment and more. People who aren’t able or willing to make that time commitment have fewer work options and are more likely to be skipped over when promotions open.
    When you manage your own schedule, you can eliminate pointless ‘butt-in-seat’ time. We all have obligations outside of our employment. If your schedule requires time to care for loved ones or just care for yourself, self-employment could be your best option.

Join Voyageur U Today!

Are you ready to take the plunge? Join Voyageur U today. We’ll connect you with a network of people who have been where you are now. 

When you join, we provide a plan to help you get started and lessons to grow your business. We answer questions you haven’t thought to ask yet, giving you a solid foundation of knowledge. 

Take the next step on your professional journey. Join Voyageur U today.

Author

John Arms.

Co-founder and Author.

I get my energy from helping professionals succeed in their independent businesses. I get to help people who were once stuck in their careers get unstuck. It’s truly an amazing thing to witness that transformation. I believe that success in the independent economy does more for a person’s pocketbook, health, life balance and sense of purpose than any other type of career choice.