Freelance vs. Self Employed: 6 Key Differences to Know

Freelance vs. self-employed – is there any difference? What exactly do you call yourself when you’re your own boss?  We broke down the main differences below.

With so many titles for non-traditional workers, the lines can get a little murky. Is being self-employed the same as freelance employment? The quick answer is yes, especially in legal standards. There are, however, nuances that workers should be aware of.

While all freelancers are self-employed, not all self-employed individuals are freelancers. It may sound complicated, but the key differences are easy to understand.

Working as a freelancer and working as a self-employed individual differs in who you’re working for, what you’re selling, and your commitment to a certain type of work, among others. To help get you through identity confusion and help you properly label yourself, we got down to the nitty-gritty of both terms and discussed its five key differences.

What is self-employment?

Self-employed worker making calls

In a sense, the core meaning of being self-employed is not being “traditionally employed”. Self-employed individuals are anyone who handles their own business and as such, they have a great degree of autonomy with their work.

Unlike traditionally employed individuals, self-employed workers get to decide what they work on, which hours they work, and how they work.

While the same may be said about freelancers, self-employed workers have more say in how they operate their business.

In the battle between freelance vs. self-employed, self-employed workers don’t take instructions from clients.

No one tells them what to do and when to do it. Business owners, entrepreneurs, and startup founders usually fall into this category.

Since self-employed workers call the shots, they may enlist the help of employees or freelancers to help them run their business.

Example: Arvin started a social media management start-up and enlisted the help of freelance content creators and ad managers to help him run his business. Arvin gets a say on his workers’ schedule and he only works when he needs to.

What is freelancing?

Freelancer looking at her phone

As their own bosses, freelancers are also self-employed. The most remarkable difference between freelance vs. self-employed is that the former can take on multiple jobs from various clients.

Freelancers can swing from client to client, accepting multiple projects at once, while self-employed workers usually focus on doing the same work every day: running their own business and making money from the services and products they sell.

Unlike self-employed individuals who do not answer to anyone and have complete control over their output, freelancers take instructions from their clients and are beholden to their requests. This means that the client has complete control over how the freelancer’s “product” should look like.

Example: Beth is a freelance writer. She has three clients – all of which require a different type of service from her: web content writing, product descriptions writing, and Facebook community management. Beth’s clients have complete control over how they want her to write.

See Related: Freelance Hourly Rate Calculator

Is one better than the other?

Freelancer vs. Self-Employed

Workers can achieve unlimited levels of success by being a freelancer or a self-employed worker – don’t let anyone tell you otherwise. It’s easy to see why freelancers get so much flack for the way they do business. Here are a couple of reasons.

Brick and mortar businesses seem more professional. In essence, both freelancers and self-employed individuals are business owners, so why don’t they get the same level of respect? Some clients hold businesses with a walk-in office to be a lot more credible compared to less tangible online businesses – though both are equally valid. Proving that a freelancer’s business is real, even though it’s mainly based online, can be tough.

Anyone can call themselves a business. Today, just anyone can create a website and offer a service. It can be difficult for some clients to tell apart which businesses are real, and which ones are just hobbies. With so many non-professionals diving into the professional marketplace, finding someone who is devoted to his craft can be challenging.

It’s easier to be a freelancer. It’s easier than ever before to offer your services online without needing an office to operate. People who dismiss the efforts of being a freelancer are often those with a more traditional mindset. They believe that a business isn’t official unless it’s brick and mortar-based, is completely yours, and you’re not taking orders from clients.

If money is the measure of success, then it doesn’t matter if you’re freelancing or self-employed. There are tens and thousands of freelancers who make a lot more money than self-employed workers who boast about building their businesses from the ground up. As long as you offer quality service, you’ll find clients lining up to your door.

What is the difference between freelancing and self-employment?

A self-employed worker on his laptop

1. Freelancers often work alone.

Workers who call themselves freelancers typically work alone. Self-employed individuals, on the other hand, are more likely to hire employees to help run their business. This isn’t because freelancers lack the financial capacity to hire help, but mainly because self-employed individuals usually operate in the entrepreneurial field.

While freelancers offer different services to multiple clients, self-employed workers focus their energies on building a business they can call their own. Naturally, businesses of a bigger scale will require the help of others.

To help you better understand this difference, here’s an example. Suzy works as a freelance writer and offers writing services to her clients. She doesn’t need the help of others to run her business and her only focus is providing top quality work.

Martin, on the other hand, is self-employed and owns a content writing company. To offer his services, he enlisted the help of a dozen writers who take on multiple projects every day. This allows him to focus on more growth-oriented aspects of the business such as sourcing clients, marketing, and advertising.

2. Self-employed workers focus on business building.

When it comes to being a freelance vs. self-employed, freelancers are often relegated to having menial, gig-oriented jobs. A common perception about freelancing is that it is “less serious” compared to self-employment, as self-employed workers are more entrepreneurial-minded with goals of building businesses from the ground up.

The truth is, you won’t find it difficult to find freelancers who earn a lot more than self-employed individuals. Just because freelancers focus on short-term contracts doesn’t mean they’re less “official” than self-employed workers who run their own businesses.

In the end, it’s all about the quality of service you provide and how much you can earn from it.

3. Both freelancers and self-employed workers have autonomy.

Unlike traditionally employed individuals who do not have the ability to choose who they work with, both freelancers and self-employed individuals enjoy a certain level of control over how they do their work and when they want to do it.

Freelancers have the ability to choose how many clients they want to accept and who they want to work with, while self-employed business owners have the freedom of running their own business according to how they please.

See Related: 5 Powerful Client Facing Skills to Have

4. Freelancers and self-employed workers differ in their level of commitment.

Since both titles differ in the clients they cater to, their commitments are different as well. Self-employed workers are committed and loyal to their own business, as well as the consumers who patronize their product and service, while freelancers have multiple commitments, drifting between one client to another once a project ends and another one begins.

In a nutshell, self-employed individuals commit to growing their business and pleasing their customers, while freelancers have multiple fleeting commitments with different people at once.

5. There’s no difference in taxes.

Both freelancers and self-employed individuals handle taxes the same way.

The Internal Revenue Service considers all freelancers to be self-employed, so here’s a self-employment tip: once you start earning income, you are required to file your taxes as if you own your own business. Freelancers may be required to get numerous 1099-MISC forms for each client they handle.

In addition to paying the regular income tax, both freelancers and self-employed workers are also responsible for paying the self-employment tax of 15.3%.

This tax is paid to your Medicare and Social Security – both of which ordinary employees pay automatically through their paychecks. This amount also includes the employer portion of your taxes (as a freelancer or self-employed worker, you are considered both an employer and employee.

See Related: How to Get Freelance Clients

6. They’re not mutually exclusive.

Freelance vs. self-employed – is there a need to choose between the two? For some workers, freelancing is a gateway to being self-employed.

A graphic artist may choose to offer his services in a freelance manner serving many different clients at once with goals of ultimately setting up his own company in the future and being self-employed.

Some self-employed individuals may also freelance, such as a restaurant owner who offers a freelance restaurant consultancy business to many different clients. You can be one or another, or even both at the same time.

See Related: Can You Do Freelance Work on an H4 Visa?

Tips on Branding Yourself to Your Clients

Freelancer meeting clients online

Let’s face it – the word “freelancer” may offer negative connotations. Some clients picture freelancers as people who float from one job to another without any loyalty, or imagine them as entry-level workers who are fresh out of college with no real experience in what they do.

Still, other people hear “freelancer” and think “unemployed”, or imagine them as desperate workers who settle on menial jobs through sites like Fiverr or Upwork for little play.

While these perceptions are ridiculous and ungrounded, it doesn’t change the fact that freelancers are still unfairly being pictured as second-class workers.

As such, this may affect how your potential clients see you. Here are some tips on how you can get your clients to take you seriously.

  • Commit to your title. It doesn’t matter what you do, but how you do it. If you’re a freelancer, admit it with confidence and let your credentials speak for yourself. One of the best freelance tips is relying on your experience to set yourself up as a professional. Brandish your experience and brush up on your elevator pitch!
  • Use your job title. Freelance vs. self-employed – which should you use when introducing yourself to a client? If you’re iffy about applying the previous tip, you may opt to use your job title to describe what you do instead of how you’re employed. “Graphic artist”, “writer”, or “artist” may sound better for some clients –  it doesn’t implicitly tell them who’s the boss in your relationship, but you can always discuss that after you close the deal.
  • Know who you’re talking to.  If your client is looking for a freelancer like you, there’s no need to be anxious about branding yourself as one. If you’re not sure, just ask: ask them how they found you and what they’re looking to get from the relationship. If your client is looking for more “professional” workers, focus on your credentials instead of your job title.
  • Take your title seriously. Whether you’re freelancing or self-employed, you’re your own boss handling your own business. Play the part. Take yourself seriously so your clients take you seriously too. Besides, if you’re a freelancer offering premium services, you’re doing other freelancers a favor by dismantling the negative stereotypes about your title.

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