Freelancing vs. Contracting: What’s the Difference and How Should You Market Yourself?

Working for yourself can be a bit bewildering. Between filing taxes and finding new clients, the learning curve is steep. 

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If you’re a solopreneur navigating the choppy waters of the gig economy, you may not even be sure what to call yourself. Are you a freelancer or an independent contractor? While the two are closely related, they are not synonymous. Understanding the differences between them can help you make informed decisions for your career. 

What is Freelancing?

Freelancing is when a self-employed individual provides services to a range of organizations. These workers select their own clients and work on their own schedules, typically earning money on a per-task basis. 

An example of a freelancer would be an independent web designer hired to create a landing page for a business.

Top Industries for Freelancers

• Journalism
• Copywriting and editing
• Graphic design
• Web programming
• Social media 
• Digital marketing and SEO

Pros and Cons of Freelancing

It’s extremely cost-efficient for businesses to hire freelancers instead of in-house employees. Ergo, freelance work is on the rise. 

This is good news for solopreneurs who want to escape the 9-to-5 hustle, set their own hours, and even travel while still earning a living. However, there are downsides to freelancing. For example, these workers don’t receive employer-sponsored health plans or retirement benefits. 

There are also few industry protections. While independent contractors are safeguarded by a legally-binding contract that details project and payment terms, freelancing is typically more informal.      

Pros of Freelancing 

• More flexibility: You can bid adieu to your office cubicle and work from anywhere at any time. Want to write a client’s newsletter while vacationing in Peru? No problem. 
• More freedom: Freelancers can also select who they work for. If one client is slow to pay or uncourteous, they can search for greener pastures.  
• More security: Many freelancers feel like the gig economy affords more security than a traditional 9-to-5. By generating multiple revenue streams, freelancers need not worry if a single client goes bust. 

Cons of Freelancing 

• No benefits: Since freelancers are self-employed, they are solely responsible for their health insurance and retirement. Vacation time is also unpaid. 
• Tax implications: Since taxes aren’t automatically deducted, most freelancers are hit with a gut-wrenching lump sum each spring.   

What is Contracting?

Contracting, also referred to as independent contracting, is when a self-employed individual partners with an organization to complete a long-term project. 

Whereas a freelancer may be recruited to write a single blog post or design a logo, an independent contractor will collaborate with a client for several months to a year. This work typically requires more involvement in a company’s day-to-day operations. 

An example of a contract worker would be a fundraising consultant hired to oversee a nonprofit’s annual campaign.

Unlike with freelance work, the scope and payment terms of contract assignments are almost always specified in a legally-binding contract. If the independent contractor or the client breaches this contract, either party could face legal repercussions.   

Top Industries for Independent Contractors

While independent contractors can work in virtually any industry with the proper experience and qualifications, some fields regularly rely on a contractor workforce. These include:

• Construction
• Law
• Transportation 
• Software development 
• Finance and fundraising
• Medicine
• Dentistry 

Pros and Cons of Contracting

Similar to freelancing, independent contracting affords flexibility and freedom. Contract workers get to pick whom they collaborate with and when. Plus, they set their own rates and are legally protected by a binding contract.   

However, there are downsides to this type of work. Since independent contractors are self-employed, they are responsible for their own health insurance and retirement. They must handle their own taxes, too. 

Compared to freelancing, contracting also requires a higher level of engagement. Contractors may be expected to keep a rigid schedule or work in an office setting. 

Pros of Contracting

• More authority: When you work as an independent contractor, you get to decide what type of projects you tackle and how much you will charge for these projects. 
• More protection: Contracting involves a legally-binding contract that details the project scope and payment details, protecting the independent contractor from nefarious clients.   

Cons of Contracting   

• More involvement: Since contracting projects are more intensive in scope, contractors are typically involved in a client’s day-to-day operations. They may even need to keep in-person office hours. 
• Fewer clients: Contracting projects can be tedious and labor-intensive. Because of this, contractors may only have the bandwidth to work with one to two clients concurrently. 
• No benefits: As is the case with freelancing, contracting work affords no employer-sponsored benefits like health insurance and retirement.    

Freelancing vs. Contracting

Now that you have a deeper understanding of freelancing and contracting, let’s compare these two types of self-employment side-by-side. 

Freelancer vs. Independent Contractor: Key Differences
	Freelancer	Independent Contractor
Projects	Short-term, more straightforward	Long-term, more involved and complex
Workload	Tend to work with many clients concurrently	Tend to work with one to two clients concurrently
Industries	Creative fields (e.g., writing, graphic design)	Technical fields (e.g., dentistry, transportation)
Schedules	Flexible	More traditional working hours
Rates	Typically by the project; sometimes bound by contract	Typically by the hour; always bound by contract
Tax Status	Self-employed	Self-employed
Employee Benefits	None	None

Should You Market Yourself as a Freelancer or an Independent Contractor? (5 Questions to Consider)

1. What industry do you work in? 

Most gig workers in creative industries like graphic design and copywriting describe themselves as freelancers. Meanwhile, calling yourself a freelance dentist or a freelance truck driver may raise eyebrows.

2. Will you be completing short- or long-term projects? 

If you want to tackle simpler, short-term assignments, freelancing is the right route. But if you want to work on more nuanced, long-term projects, contracting may be more appropriate. 

3. How many clients will be on your roster? 

If you prefer to collaborate with several clients concurrently, freelancing is best. If you prefer to zone in on one or two clients at a time, contracting may be more up your alley.  

4. Do you expect clients to sign a contract? 

Some freelancers require that clients sign a legally-binding document before any work is completed. However, this is a much more common practice in the world of contracting. 

5. What do you want your lifestyle to look like?

If you want to be a wayfaring nomad, freelance life is probably best. But if you’re okay with a more traditional, 9-to-5 existence, contracting could be the perfect fit.