The terms self-employed and freelance are often used interchangeably, but if you’re considering setting up your own business or working for yourself then it’s important to understand the difference between them.
Here, we take a look at what being self-employed or being freelance actually means and how they are separated.
What does self-employed mean?
Being self-employed means that you are working for yourself — you are your own boss and you don’t work for an employer. You’re the owner of the business that you work for or you work independently as a freelancer.
If you’re able to choose your own hours, decide what work to do, who you work with, and how you do it then you are self-employed. The term self-employed covers a whole range of different roles including entrepreneurs, founders, and business owners.
For example, if you work as an independent plumber and you find and choose the clients you work for and the jobs you do, you’re self-employed. Likewise, if you set up an online store by yourself, you’re also self-employed.
What does freelance mean?
Freelance means that you are self-employed but hired by other companies and organisations to undertake a particular role or assignment. This essentially means that being freelance is a type of self-employment.
As a freelancer, you’ll usually work with a number of different clients doing the same kind of work. For example, you might be a freelance graphic designer and you’ll work with several businesses to produce the graphics or images that they require. You could also be a freelance writer who writes articles, social content or web copy for a living.
Freelancers can be hired on a short term basis to complete a small piece of work or project, or they might be hired on a contract for a set amount of time.
What’s the difference between being self-employed and freelance?
Working as a freelancer is effectively one type of self-employment. A freelancer is self-employed, but someone who is self-employed isn’t necessarily freelance.
When it comes to the legal side of things and taxes, you’re considered self-employed as a freelancer so you will have to pay taxes in the same way. However, there are a few slight differences between the two.
More control when you’re self-employed
Being self-employed covers a wide range of different jobs and positions, but most self-employed workers are only responsible for themselves, their business goals, and their customers.
As a freelancer, you might have less control over your work. You have to meet the requirements of another business or client, understand what they want from you and fulfil the job to their standards.
Freelancers work alone
Freelancers usually work on their own but with multiple clients. If you’re self-employed and running a business you might hire other people to work with you.
It can be harder to scale as a freelancer
You can usually make a reliable income from working freelance as you’ll charge clients for your time and work at a higher rate than if you were employed full time by them. However, it can be harder to grow your income as a freelancer because you can’t scale up the services you’re offering — there’s only so many hours you can work and so much you can get done in that time. As your experience and skill increases throughout your career, you’ll be able to charge higher rates, but you may find a limit to what clients are willing to pay.
If you want to increase your income as a freelancer then you’ll probably have to consider setting up a business and working with other people or changing the service you offer so that you can grow your business and expand.
Freelance work is more flexible
Working as a freelancer is often a lot more flexible than other types of self-employment. You can pick and choose the clients that you work with and find ones that fit your schedule or commitments.
While you may need to meet up with your client a few times, a lot of the work can be done remotely so you could work from anywhere, or even move around (some freelancers travel while they work or settle in a cool city as a digital nomad).
A lot of other self-employment requires you to establish and run a business in one place, and you have to be consistent in the amount of time you spend working on your business in order to keep it going.
If you’re thinking about starting to work for yourself, these are the key differences between being self-employed and freelance.
If you’ve got a set of expertise and skills that people are looking to hire freelancers for, it’s a good way to earn a steady income and can be a flexible opportunity. But if you want to set up a business that you can grow over time, then you might want to look at other types of self-employment.