Freelancer Vs. Independent Contractor: What is the Difference?

First published: September 26, 2022 @ 6:00 pm

Freelancer workers and independent contractors both work in the same industry, they both do the same tasks and they both have the same employment law.

However, there are some major differences between these two groups of workers.

What are they?

Freelancer Vs. Independent Contractor: What is the Difference?

What is Freelancer?

Freelance workers are people who are not full-time employees but are paid on a project-by-project basis, rather than by the hour.

While most freelancers use a freelancing website to find work, freelancers can also build their own websites and businesses from home.

They are basically self-employed workers who are independent of the traditional employment structure.

Freelancers are young (aged 21-34), highly educated (college degree or higher), and have a low level of formal education.

They are also very tech-savvy, using websites such as Upwork, Freelancer.com, and Fiverr to find work.

What is Independent Contractor?

Independent contractors are hired to perform work or services for others on a job basis.

As a result, independent contractors are not required to be employees and are not covered by most employment laws.

You cannot form an independent contractor relationship if you are:

• Hired as an employee by someone other than the client; or
• Hired to perform services for a single client in the course of your regular business; or
• Agreed with someone other than the client that is separate from the one you are performing for; or
• Employed by someone other than the client, but you don’t perform services for that person. Instead, you provide them with labor, materials, or equipment for wages.

Independent contractors work on a certain period of time.

Photo by Pixabay on Pexels.

What is the Similarity Between The Two?

The employee benefits that freelance workers and independent contractors receive differ, but the primary difference is that employees are provided a full-time job with a fixed salary.

Freelancers and independent contractors receive payment only when they complete a project. The employer usually takes care of taxes, pays health insurance, and offers other benefits.

There are three main reasons people choose to become independent contractors: flexibility, less work hours, and control over their own destiny.

Freelancers can set their own hourly rate and work schedule when they want to.

They can also make more money than full-time employees because they’re not subject to overtime or minimum wage laws.

To be clear, there are many advantages to being an independent contractor rather than a traditional employee in the United States.

For example, you have the option of setting your own schedule and making more money for doing the same work as your full-time coworkers.

However, if you’re planning on taking advantage of these benefits, it’s important that you know how to file properly as an independent contractor in your state.

This will ensure that you don’t run into problems with the IRS later on down the road.

What is the Key Difference Between The Two?

Freelancer and independent contractor are two different names for people who work independently.

The only difference between the two is the way they refer to themselves and the companies they work for.

Both the terms mean ‘free’, ‘independent’, and ‘short-term work’.

In simple words, a freelancer is a person who works independently.

Meanwhile, an independent contractor is a person who works under another company or organization.

Should You Work as One?

In terms of financial control, freelance workers and independent contractors can have a great deal of control over their financial well-being.

You can work when you want to, how long you want to, how many hours you want to work, and even if you want to take any breaks at all.

All this control is because of the autonomy and flexibility of independent contractors and freelancers.

However, in terms of legal rights, being an independent contractor can sometimes mean that you don’t receive the benefits that are available to employees.

Additionally, in the event that a problem arises in your working relationship with your employer, it is not always easy for temporary employees to prove their rights.

Therefore, it’s important for all freelancers and independent contractors to learn about their state’s laws regarding labor laws and find out if there are any issues that may affect them.

Photo by Tranmautritam on Pexels.

So, Is Permanent Employee Still Your Choice?

In this article, we have explained that there are some similarities between freelancer and independent contractor, such as both types of work require skills and knowledge.

The employer-employee relationship in permanent employee, freelancer and independent contractor depends on the work and type of employer.

If you are a permanent employee, you have the rights to certain benefits.

You can get a tax-free housing allowance if you live in a designated place or on a ship, you can get a health care coverage and retirement benefits.

Freelancers and contract workers don’t receive such benefits. However, they have more freedom at work.

When choosing to become one, it’s a good idea to take into consideration the advantages and disadvantages of all types of workers.

Our blog, WorkDeputy, focuses on helping employers hire the best workers for the job.

You can ask our experts about the major differences between freelancer and permanent employee and what it means for your business.