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Want to be a freelancer or contractor? Here is what you need to know.


You can pick and choose your clients. You’ll probably want to take on any client who will hire you when you’re starting out, but you also have the option not to take on difficult clients, especially as you grow. You can even fire them.

You might pay less in taxes. The IRS treats employees and independent contractors quite differently. Thanks to recent tax law changes, employees can no longer deduct unreimbursed work-related expenses– but independent contractors can. You can deduct business expenses from your earnings on IRS Schedule C to reduce your taxable income.

Set your own hours. Freelancing is flexible. You can often work full- or part-time on projects of your choice.

You’re an independent contractor. Although clients can– and usually will– set specifications for the work they want done, a freelancer is still an independent contractor, not an employee. You ‘d be free to control how the work is completed. Of course, if your clients don’t like the final product, you might find yourself out of a gig.

The freelance marketplace is competitive, the need for quality, reliable freelancers is growing. Many businesses don’t have employees these days.

It’s often affordable. If you have the ability to provide a certain service, you most likely also already have the equipment or software you need to deliver it. You shouldn’t face steep startup costs.

Nearly every type of service needed by most businesses could be provided by a freelancer, including marketing, publicity, advertising, technological support (such as web programming), creative works such as graphic design, and financial support such as bookkeeping.

Want to be a freelancer or contractor? Here is what you need to know.

What Exactly Is Freelancing?
A freelancer is a self-employed person who offers services to clients and often to multiple clients at a time. These services are usually offered to businesses, though the proliferation of sharing economy apps like TaskRabbit and Uber also means that many freelancers can offer their services to individual consumers.

Get paid what your worth. Freelancing allows you to set your own price for your services, which is often higher than what you ‘d make as an employee doing the same work. Make sure you charge enough to cover your overhead and to compensate you fairly for the time it will take you to do the work.

Ask yourself what you’re good at. What is it that you do better than just about anyone else? In what areas do you excel? Can individuals or businesses use your skills?

Interested in joining the Gig Economy and earning money outside the context of a full-time job? Here’s what you need to know about freelancing.

The Advantages of Freelancing
Freelancing can be an affordable and fast way to get started working as your own boss, often from the comfort of home.

Maybe you’ve dreamed of going out on your own for years– no more saluting that boss or supervisor, or working hours that someone else decides for you. But the idea of starting your own business can be scary. You don’t see yourself as a CEO, at least not yet. You just want to earn income on your own terms.

Freelancing might be the answer. Approximately 55 million Americans were freelancing in 2016– about 35 percent of the workforce. Some of those are full-time freelancers; others are still holding down a 9-5 job, but doing “side hustles” in their free time. The proliferation of such part-time and freelance work has people talking about a new kind of labor market: The Gig Economy.

The Disadvantages of Freelancing
Freelancing isn’t perfect for everyone, and not everyone is suited to it. Here are a few of the downsides:

Your clients have schedules, too. Yes, you can set your own hours for the most part, but if a client can only see you at dawn on Tuesday, you’ll need to get up with the crows.

Things are different when you’re on your own.

Taxes: Independent contractors don’t have their taxes deducted automatically, but they still have to pay them. Usually when you sign on with a new freelance client, you’ll need to fill out a W-9 tax form so that your client can report what they paid you to the government. You should also be keeping track of your earnings over the course of the year, determining roughly how much you owe in taxes as the year goes, and then making those estimated tax payments on a quarterly basis.

What it all comes down to is that working and being a freelancer in the gig economy means taking a lot of responsibility for your own finances, whether that’s negotiating your pay, finding insurance, or paying taxes. If you love the freedom, flexibility, and earning potential that comes with being independent, that’s a price you’re likely willing to pay.

The work isn’t always consistent. This is particularly the case if you’re offering one-and-done services, like creating a certain product. You turn the finished product over to your client, and that’s the end of it– you have to find a new client who wants your product so you can create another one and be paid for it.

Want to be a freelancer or contractor? Here is what you need to know.

Some people like the variety of working on several projects at once, others might find it difficult to keep track of deadlines. You have to pace yourself to deliver and produce quality work on time.

This will likely also involve negotiating the rate you’ll be paid. Some businesses will have a standard rate they pay to their contractors; some contractors will have a standard rate they charge clients. If those numbers are far apart, then be prepared to negotiate … And be prepared to walk away if they don’t meet your standard.

Getting Started
Getting started as a freelancer can be as easy as visiting one of the freelance sites to find work and networking within your current sphere of influence to find your first client. Consider using a freelance site, such as Freelancer.com or Upwork to find work. They might pay less than you want, but this can be a great way to get your name out there and to get testimonials and referrals.

You’ll have to pay for your own benefits. You’ll lose out on perks like employer-sponsored healthcare and retirement plans.

The work doesn’t end when you agree on a rate and draw up a contract. In many cases you’ll need to send an invoice and produce for all the work that you do, either on a monthly basis or every time you submit work to the client.

Determine your target market. Who needs what you have to offer? This is the time to decide your brand and your unique selling proposition.

Insurance and benefits: If you’re a full-time freelancer, then you’re on your own for benefits. That means no getting a discounted group rate on your health insurance, or getting those premiums deducted from your paycheck. It also means not having an employer-sponsored retirement plan.

You’ll have to pay self-employment tax. This is the flip side of paying taxes on less income. When you work for someone else, your employer pays half your Medicare and Social Security taxes, but now you effectively are your employer. You’ll have to pay both halves. This is commonly referred to as the self-employment tax.

Create an online portfolio. Build a profile that promotes what you have to offer. Eventually, you’ll want to invest in business-building tools, such as a website that can offer you more customization and flexibility, but LinkedIn is free and it’s a great online resume that can help you promote your service. You might also consider Portfoliobox, SquareSpace, and Journo Porfolio.

Taxes, Insurance, and Money Issues
When you’ve got a job, most of the “money stuff” is taken care of. Your get a regular paycheck without having to ask; your taxes are deducted automatically; and insurance is likely also taken care of through your employer.

On the bright side, being a business owner means that those expenses you incur as part of your business operations can be deducted from your taxable income. Did you spend a couple thousand dollars setting up a home studio and buying equipment for your photography business? Talk to an experienced tax preparer about how you can deduct those costs on your return.

Getting paid: This can be one of the more time-consuming and frustrating aspects of freelancing. When you start a new gig, in most cases you’ll want to have a contract specifying the terms of your relationship with the client, the deliverables, and the compensation; if the client doesn’t have a standard contract for their vendors and service providers, you might need to draw one up yourself.

More seasoned freelancers can avoid this issue by finding clients with a substantial volume of consistent work, and impressing them so that they become regular vendors or service providers. A freelance writer, for instance, might have a client that requires an article twice a week on an ongoing basis.

Getting enough clients to support yourself and your family through freelancing can take a while, and many freelancers experience an ebb and flow in their work. You’ll have to plan for lean times and be ready to work hard to deliver work on time when work is plentiful.



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