Independent Contractor vs. Freelancer: What’s the Difference?
If you’ve ever had to hire someone for a job, you know there are a lot of hiring terms to understand when searching for the right talent. Two terms that are often confused yet are completely different are “Independent Contractor” and “Freelancer”. Both come with their own unique set of benefits and pitfalls, so let’s look a little closer to see the significant differences between the two.
What is an Independent Contractor?
An independent contractor (or a self-employed worker) is a natural person or a business entity that provides services to another company outside of a traditional employment arrangement. To be clear, an independent contractor is not an employee, meaning there is no employer-employee relationship as such. Instead, the independent contractor performs their service on a contractual basis.
Independent contractors have tremendous flexibility in terms of the services they are able to provide. The freelancer is free to set their own hours, manage their own workflow, set their own rates, and even negotiate their own contracts – all while owning their own business. And, since they’re providing services to a company as an independent contractor, they are also eligible for certain tax benefits and write-offs that employees do not enjoy.
Reasons to Consider Using an Independent Contractor
When you hire an independent contractor, you’ll have a worker who is flexible, independent and has a lot of experience. Here are just a few of the advantages of using independent contractors:
• They’re not tied to traditional work hours.
• They may have more in-depth experience in certain areas.
• You don’t need to manage their workflow or provide benefits.
• They can provide specialized expertise without needing to be trained.
• You’re not responsible for payroll taxes or other employee benefits.
• You can often get a project done quickly and cost-effectively.
What is a Freelancer?
A freelancer (or a contractor) is someone who works independently on short-term projects. They are usually self-employed and work on a project-by-project basis. In some cases, the freelancer may need to apply for the project with a proposal.
Essentially, a freelancer provides services to large and small companies, services that may not require the long-term commitment of an employee. They are working for themselves, setting their own hours, rates, and workflow.
Reasons to Consider Using a Freelancer
The advantages of using freelancers include the improved access to a wide range of expertise and experience, and the ability to employ highly skilled and specialized workers on short-term projects. Here are some of the benefits of using a freelancer:
• You’re not responsible for payroll taxes or other employee benefits.
• You can get top-notch talent without having to commit to long-term agreements.
• You don’t need to manage their workload or provide benefits.
• They often provide the expertise necessary to complete a project quickly and proficiently.
• They can provide specialized expertise at lower rates than traditional employees.
• You are not responsible for the projects they do outside of the contracted project.
So, what is the difference between a freelancer and an independent contractor? Generally speaking, an independent contractor is a business entity or someone in an independent business relationship with a company, while a freelancer is a person working on a project-to-project basis for a number of different companies. The differences in the legal obligations and tax treatment of freelancers and independent contractors is significant, so it is important to understand the differences and to select the option that is best for your company’s needs.
