Freelance vs. Self-Employed: What are the main differences?

In this article, I would like to share my personal ideas about the main differences between being a freelancer vs. self-employed. Still, not forgetting about their similarities as well.

Freelance vs. Self-Employed

Please take into account that there might be some differences in the legal status of freelancers and self-employed persons in different countries, but I tried to collect the main differences that will be suitable for every country.

So let’s start with the freelancing life.

Being Freelancer

Freelancers are self-employed and non-permanent professionals who offer their products and services to clients. Their scope of work, involvement, as well as the length of contract with their clients are not limited.

The freelancers are aware of the market’s volatility and do not focus on a single client or one firm as their revenue source. Freelancers feel more secure in doing their jobs when they have long-term clients.

Most people work as freelancers in the creative and media industry. They can be freelance writers, designers, web developers, and photographers. 

Pros of Becoming a Freelancer

Freelancers have the freedom to choose clients. They can choose the persons they want to work with and how many customers they take on. Freelancers have control over the quantity of work.

  • can work as few or as many hours as they like;
  • select projects that they find rewarding;
  • have time flexibility;
  • can work part-time or full-time, depending on their schedule;
  • can choose how much time they should spend daily.

Cons of Becoming Freelancer

The work of freelancers is irregular. This is the most highlighted drawback of becoming a freelancer, which is securing consistent work. In this method, the clients can terminate the contract early. It is difficult for freelancers to find new gigs when they finish the job.

If you are self-employed

All freelancers are known as self-employed, but not all self-employed persons are freelancers. In the world of business, Self-employed persons are known as entrepreneurs. The projects, methods, and work schedules are all up to them. The customers have very little influence on the behavior of self-employed persons. They are more inclined to employ workers and occasionally recruit freelancers to gain assistance.

Pros of becoming Self-employed

For these people, it is possible to change their passion into an income source by starting their own business. They have an opportunity to earn from their dreams.

  • have freedom and flexibility as they are their employer, and no one instructs them about their job.
  • do not have any limit on money-making, which means there will be no upper limit for earning money from their business because they can get back what they have put into their business.
  • The growth of the business is totally in the hands of self-employed persons. 

Cons of becoming self-employed

The additional taxes of self-employed persons are higher than those that their employers pay. They lack benefits and perks. It is expensive and difficult to receive health insurance.

They don’t have vacations or paid time off, and they also don’t have any paid sick leave. Self-employed persons do not get paid or compensated if they won’t or can’t work. 

Freelancer vs Self Employed

Freelancer and self-employed are interchangeable terms that are very popular all over the world. Freelancers and self-employed people have many similarities, but they also have differences, especially in a legal way. 

Work nature

Freelancers are free to set their rates and hours on their own, and they accept the job or work from other people. Terms are accepted, contracts are signed, and then they perform their work.

Freelancers are those persons that generally work alone and from their home. They don’t take any help from someone in their work. Freelancers can work from anywhere and anytime.

difference of being freelancer and self-employed

If an individual has a regular job, he can also be a freelancer. This is often done by persons who have jobs, and they do freelance as well.

Freelance jobs help supplement the regular salary or income, follow a passionate hobby, and see the freelancing potential as a gig of the long term. So the work nature of the freelancers ranges from various categories such as writing etc., but it does link with multiple clients as well. 

On the other hand, self-employed people own their own businesses, they migh have a personal freelance website and they don’t have any type of individual contracts with clients. The self-employed persons have their own team that they supervise. This team helps him to run his business. A self-employed person usually leads businesses of large size as compared to those that any freelancer operates.

The people who are self-employed work for themselves, so they don’t have to bound themselves to conventional job hours. They don’t have any day jobs, so they work according to their own schedule. 

Simultaneous tasks

Freelancers work for other people, and they accept tasks from other people. They usually work on multiple jobs at the same time and work on more than one project simultaneously. Freelancers have multiple contracts with different clients at the same time, and they are able to work on different projects simultaneously.

The individuals that are self-employed also work with different companies at the same time, but there is a difference that they don’t share their work information with anyone, and they also don’t describe their tasks or job.

Self-employed persons can own one or more companies by which they funnel their work contracts. They are very much loyal to their own business and they focus on their prospective and current customers in order to satisfy them. They try to perform well so they can grow their own business and keep the customers happy.

Customers and clients are two different terms that are often interchangeable, even though both of them have their own meanings.

The clients influence the contract terms as well as have a task that is performed for them.

The customer tends to look for any product or service to buy based on any factor. This clearly states that freelancers have clients and self-employed persons have customers.

Importance of classification in freelance vs. self-employed

It is important to define a person either he is a freelancer or self-employed. There are different reasons why a proper classification among freelancers vs. self-employed matters. 

Benefits

If there is an improper classification among the freelancer and self-employed, then a person can lose out on different benefits.

For example, suppose an individual is an employee and is classified as an independent contractor. In that case, he will not receive different perks of employees like sick time, vacation days, health care insurance, and workers’ compensation.

That’s why it is important to determine the nature of work, either as a freelancer or self-employed, because that’s how responsibilities and job tasks also vary in their nature. 

Freelance vs self-employed taxes

Suppose an individual is identified as a freelancer or independent contractor with a client. In that case, they will not withhold Social Security taxes, Medicaid, or income taxes on the money that they will earn.

The individuals will be fully responsible for reporting their income as well as the payment of their taxes of self-employment.

We are here at on of the most boring, but same time important parts – taxes. There are different implications of tax that both freelancers and self-employed have to bear; it is better to initiate with the checklist of IRS. It includes:

Filing Schedule SE

The taxes of Schedule SE are similar to the taxes of social security that a person has to pay if he is an employee. According to the rule of 2021, the tax rate for self-employment is 15.3%. similar to Schedule C, Schedule SE must be filed with a person’s tax return. 

Need to repeat again that there might be other different forms in your country that has different names, so make sure to consult your legislation before proceeding.

Receiving from 1099-MISC

This is a type of form that shows how much money a person can earn from his client in one year. Another form that is crucial for those who want to be an official PRO.

Quarterly Taxes

In order to know how much tax a taxpayer owes in every quarter, the individual can forecast how much money he will probably make in one year, or he has the option to use the same amount of money that he has paid during the previous year.

The calculation of taxes that a person has owed is good because not paying the taxes can also result in the implantation of fines against the person.

Filing the Schedule C

Schedule C is a form any self-employed taxpayer has to include in their tax returns. So, the listed-on schedule C is the loss and profits of your business. 

There is no exact legal boundary between self-employed and freelancer, while there are some differences by which a person can start his business. It depends on the amount of money that a person is making, the individual may or may not need to file his business license as a freelancer.

In many cases, freelancing is a method in which a person is willing to pay for the work. If a person wants to register his business, regardless of the legal matters. The self-employed should start with building a sole proprietorship, and then they can expand their business from it.

Small-time freelancers do not have to worry about the business and legal issues, but with time, when the business grows, then the individual will need insurance to make his assets safe. Insurance also helps to win different contracts. Different large companies work with contractors who has their liability insurance.

It depends on the type of client, industry and country specifics. Generally, there is no difference in filing the taxes of freelancers and self-employed persons.

Similarities between Freelancer vs. Self-employed

Both freelancers and self-employed have some common factors, and they could be mistaken easily for others at 1st glance. There are some similarities between self-employed individuals and freelancers.

Similarities between Freelancer vs. Self-employed

Self-employed persons and freelancers have creative freedom. This freedom allows individuals to express themselves in their own work. The workers that are self-employed have the authority over the business type that their brand is operating.

The freelancer has the choice to select their own clients as they wish. they also have the freedom of selecting the type and nature of the project.

The self-employed and freelancer persons have more independence as compared to the regular workers. Both are able to make their own decisions regarding the tasks, work, their work schedule, and who they will work with.

Freelancers and self-employed persons, to some extent, bear some control over their work. Both of them choose how and when they will work. For example, a freelance creative writer has control over the sentence that he decides to write and he also has the independence of the sequence in which he will write the sentence.

Similarly, self-employed individuals have full control over how they will deal with their business logistics. The regular employees do not have this type of autonomy as their senior manager assigns work to them, and they are not meant to finish the work in a way that the employer has instructed them. 

Difference between Freelancer vs Self-employed

Along with the similarities, there are some differences that self-employed and freelance persons have. The professionals who work as freelancers mostly work alone. The self-employed persons generally employ other persons that assist them as well as ensure smooth business operations.

It is not because the freelancer does not have the financial condition to recruit the help, but instead, self-employed people are entrepreneurs. Freelancers provide different types of services to different clients; the self-employed persons put all their efforts into creating a brand or a company. The people who expand their business or any large enterprises need the help of others.

Self-employed individuals generally own a company or firm with an operational structure. They have a brand that they market and build. These people focus on building strong professional relations with their employees and clients. They want to scale their organization and achieve their goals and objectives.

On the other hand, freelancers focus on offering their services to different clients. They frequently choose to do temporary work. Self-employed persons are more focused on building their startups and enterprises. They look for different grants, investors, and strategies or opportunities to scale up their business.

Both self-employed and freelancers enjoy some sort of autonomy or independence, the level on which they work or the extent of control is different for both of them.

A freelancer has some control over deciding the clients with whom they will work. They do their work in a way their client wants. When they accept a task from their client, then they will complete the task according to the requirements of the client, and they also have to complete the work in the desired timeframe of the client.

The self-employed persons have more control as compared to the freelancers in this matter. They have freedom in case of the services that they will offer and they will offer them. Both have some control, but the amount differs.

The self-employed persons are totally dedicated to their firm, customers, and business. Customers are important because they buy the services and products of their firms. The main objective of self-employed individuals is to expand their brand or business. They do it by enhancing good professional relations and customer service. Generally, freelancers have temporary work, so they are committed to short relations with clients as compared to self-employed persons.

Freelancers have flexible routines and work schedules. Although freelance work has deadlines, the work schedule depends on the freelancer’s decision. Self-employed persons have a high amount of flexibility but have less choice in the routine or work schedule.

If the self-employed persons have physical offices, then they have specific opening and closing hours for their physical offices.

When anyone works as an employee of the organization, then the company decides his location of work and which site or location will be suitable for him.

Freelance work provides an opportunity to select the place where you want to work. The freelancer usually works from their home or they make a small setup for an office space.

The location of the freelancers largely depends on the business nature. If the nature of the business requires a fixed position, just like the physical office, then the freelancers have fewer options in terms of the flexibility of the location.  


FreelancerSelf-employed
Number of clientsHandle many clients at one timeFlexible depends on the preferences
Contract periodShort projects, hourly or daily basisShort or long projects, flexible depending on the preference
WorkplaceRemote workMay be remote, physical building, in an office, etc. 
Work scheduleThey have a flexible scheduleThey have a flexible schedule 

Final Thoughts

Freelancers are passionate, serious, and passionate persons, and they have lots of talents. For any reason, they want to keep going under the radar little as well as keep their profile of business low-key. It does not mean that they are not making a good amount of money.

The self-employed persons are in it for a great heave. They start out with the knowledge that they know, but they are focused on building a new and large setup to pull them into a freelancing contract.

Are you a freelancer or self employed? Share the answer in the comments section below, lets fugure out how many representatives of each sectins are here 😉

Vasy Kafidoff
Vasy Kafidoff

Vasyl Kafidoff is the founder and mastermind of KAFIDOFF.COM. He has a strong interest in education, modern technology, marketing, and business management.

If Vasy is not working, you can find him somewhere in the world attending a Rock Concert with his mates.

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