What’s the Difference Between Being Freelance vs. Self-Employed?
Over the past two decades, employment has changed drastically. Now that we’re in the digital age, people are able to work wherever and whenever they prefer. One result of this trend is the advent of remote workers, also known as self-employed, sole traders, freelancers, and entrepreneurs. All these terms are used to describe anyone that works independently rather than through a traditional employer. Although most of us use these different terms interchangeably, they aren’t all the same.
We’re going to explore (below) the differences in how freelancers and self-employed workers are defined. First, we want to point out that both types of workers do need public liability insurance. Many self-employed and freelance professionals shop for business insurance via Public Liability Australia’s website. Click here to take a few minutes to get a public liability insurance quote and coverage details. You can get everything sent to your inbox or simply call a Public Liability Australia agent.
Now let’s start exploring the differences between freelancers versus self-employed workers.
Defining “Self-Employed”
Think of self-employed individuals as anyone that’s the boss of their own business. If you set your own schedule, decide what projects you want to work on, and define your project plans independently, then you’re a self-employed worker. Business owners, startup founders, and entrepreneurs all fall into this category.
It’s not unusual for a freelancer to call themselves “self-employed” on taxes or other government paperwork. In this sense, self-employed just means “not traditionally employed”.
For example, James owns a business fixing broken mobiles and computers. Nicole runs a career coaching service. Both James and Nicole are “self-employed”.
Defining “Freelance”
Contractors, or freelancers, are also self-employed people. The biggest difference is that freelancers take on a variety of different projects or assignments from multiple clients. If you’re self-employed, then you can usually focus on the same type of work daily and make an income off services or products you sell. On the other hand, freelancers may move from customer to customer, one day working on data entry and the next day developing a marketing campaign.
For example, Daniel is a freelance web developer. Last month he was building a new website for a pet store and this month he’s designing a mobile app for a fitness influencer. Michelle is a freelance writer that spends three days a week editing a nonfiction book for one client and the other two days writing blog posts for another client.
Maybe the biggest difference between these two types of individuals is the freedom in their respective roles. Freelancers are usually at the mercy of their client’s requests and tend to work alone. Self-employed people are more likely to run their own small businesses and may even have some employees too. Freelance people may not have the chance to select which brands to work with while self-employed people usually can.
Self-Employed vs Freelance: The Similarities
Besides needing to buy public liability insurance, there are three more similarities worth mentioning.
Creative Freedom
Traditional employees usually don’t have the opportunity to choose their work assignments or express their creativity. Both freelance and self-employed people have the chance to express themselves via their work projects. In fact, this is a common reason for individuals to strike out on their own, independent career path. For self-employed workers, they can control what kind of products or services they sell. For freelance workers, they can decide which customers to work with.
Autonomy
Overall, both types of workers get to enjoy a certain level of control over their work, particularly how and when they will work. Freelancers have the freedom to decide their pricing, processes, and production. Self-employed business owners get to do all that too but on a much bigger scale since they are running a company and not just working alone.
Tax Assessments
When the fiscal year ends and it’s time to file their tax assessment, both self-employed and freelance people will need to fill out similar tax forms. They will both report their revenue, expenses, and profits. Usually, they will be taxed in a similar fashion as well.
Self-Employed vs Freelance: The Differences
Now we’ll dive into the differences between these two types of workers.
Titles
Think of it this way: freelance workers are always self-employed, but self-employed workers aren’t always freelancers. That’s because self-employed or sole traders usually run their own startup businesses and focus on a specific line of work. The type of title someone uses can leave an impression as to what and how the person does their job.
For instance, being called “freelance” may imply to some that the person works for lots of clients, performing lots of random tasks, and may just be starting their professional careers. However, being called “self-employed” seems to elevate the worker to a high level of achievement and success in many people’s minds.
Level of Control
Although both self-employed and freelance people have a lot of freedom and get to make many choices about their jobs, they aren’t always at the same level. That’s because freelancers don’t always have the option of selecting the work projects, they’d like to handle but, instead, are given the project their client needs to be completed. Freelancers must defer to their clients as to the type of project, the deadlines, and the results they expect.
Commitment
Self-employed individuals are dedicated to their business, their team members, and their multiple clients. Freelancers usually work alone and are only dedicated to their customers. If their regular client decides to cut ties, then the freelancer will normally move on to another client.
Which Type of Worker Are You?
Now that you know more, you may be wondering which type of worker you are. Well, that’s totally up to you. Most people won’t care too much if you call yourself self-employed or freelance. The main thing to focus on is how each title makes you sound to potential customers and business partners.
How will they perceive the different terms? Does the term you use accurately reflect your goals? Do you want clients to perceive you as having multiple projects and working alone as a freelancer? Or do you want customers to perceive you as being a business owner? Do you want the public to see you as independent, autonomous, and established? If so, then you may opt to use the word “self-employed” on your business cards.
At the end of the workday, the choice is all yours. Either way, it’s not really about what title you use but rather the work you do.
