Do you have to choose between a freelancer and contractor?
The answer isn’t that simple. First, you have to understand the difference between both work solutions and which one benefits your business the most.
There is a big gap between working with a freelancer and working with an independent contractor. Even though both options are similar, the conditions they typically set are different. As such, the benefits you can expect from each are quite different.
In this article about freelancing vs contracting, we show you some of the similarities and differences between freelance employees and contractors. We also highlight some of the jobs you can expect them to handle for you. There are also a handful of useful tips for choosing freelancers or contractors.
Freelance vs Contract
Choosing between a freelancer and an independent contractor can be a challenging task. Both of these categories of employees may be described as separated by a hairline. In other words, they can appear identical to an uninformed point of view.
Thus, to know which is which and why they are considered distinct occupations, let us first define them.
What is a Freelancer?
A freelancer is simply a temporary employee for organizations with particular needs for outsourced agents and agencies.
These individuals are self-employed in the sense that although they work for you, you are not strictly their boss.
Instead, they are best referred to as partners in a team where you are the superior but they have a great deal of freedom and options.
The distinguishing mark of freelancers is choice. They can choose to be and do anything. Therefore, you can think of a freelance worker as someone with usable skills who would rather work from outside your business organization than from within. As a result, they are not restricted by the terms and conditions that restrict your company staff.
Freelancers pick their clients and projects and set their rates and hours in most cases. They usually work on a project-by-project basis and are free to work with different clients and organizations at the same time.
Examples of freelancers include:
- Graphic designers
What is an Independent Contractor
An independent contractor is very much like a freelancer in that they also work from outside your company. You cannot hire them the same way you hire your full-time staff, but they are generally more committed to the task you assign to them.
You can think of an independent contractor as a skilled and experienced stakeholder you can rely on for big projects. Yes, they are not part of your company, but they tend to stick around for the duration of whatever project you delegate to them.
Furthermore, independent contractors tend to be authorities in their fields. That means reputation is a big part of what motivates them to work.
An independent contractor or contract employee can be self-employed or hired by an agency. Depending on the terms of the contract, the employee can work full-time for your company or choose their hours. They can also work on-site or remotely.
Independent contractors include:
Freelancers and independent contractors are quite similar. Some of the characteristics they share are explained as follows.
- Contract Agreement: The first and most fundamental factor common to both freelance workers and independent contractors is a contract agreement. For the ‘normal’ employee, the contract that allows you to delegate tasks to them is included in the terms of employment. This arrangement means that you can always ask them to do anything for you within the period under which they are actively working for you. This is not the case with freelancers and independent contractors. For the latter, everything you ask them to do has to be included in a single contract agreement and that contract is time-framed. So, freelancers and independent contractors can only work for you based on the stipulations in the contract.
- Terms of Engagement: The way you engage freelancers is also similar to the way you engage contractors. With your office employee, you can have more control and manage them closely. However, towards freelancers and contractors, you have to exhibit some degree of regard and respect. Because they work outside the formal margins of your organization, you generally have to work with freelancers and independent contractors as temporary partners. In other words, their opinions count for every task you outsource to them.
- Self-Management: When you work with freelancers and independent contractors, you typically don’t have to worry about managing them. Instead, they can be described as coming with strong default automated settings. Put differently, all you have to do is point them toward the tasks and indicate expected outcomes. In the same way, you don’t have to spend the extra effort, money, or time monitoring or supervising them.
- Task Flexibility: Both freelancers and independent contractors have a strong sense of flexibility. When you assign tasks to them, they are typically innovative in how they perform these tasks. As a result, you can consider them to be more flexible compared to your workplace employees. Furthermore, both freelance workers and contractors tend to be versatile due to having worked with numerous clients. Therefore, they are more useful for certain tasks that require initiative and ingenuity.
- Team Option: Freelancers and independent contractors are able to function in teams. You can think of them as very adaptable in this respect. Assuming you have a task that requires individuals from 4 or 5 different and unrelated fields, you can make use of either freelancers or independent contractors and they will have no problem fitting into your team. Also, unless you object, both freelancers and independent contractors can easily form teams that speed up the delivery of tasks. And you may not have to pay them more since it is their prerogative to engage more freelancers or contractors to complete your task.
- Remunerations and Benefits: Freelancers and contractors are not entitled to the same payment structures as full-time employees. Except in some cases, independent contractors and freelance workers don’t get things like healthcare benefits, paid and unpaid time off, and promotions.
- Taxes: Companies normally file and sort taxes for full-time employees. But freelance and contract workers have to process taxes themselves. This fact is usually boldly stated in the agreement or contract.
- Equipment: You’re not always obligated to provide equipment for freelancers and contract employees. Contractors and freelancers come ready with their tools and resources and having these are often a factor of employment.
Despite the similarities between freelancers and independent contractors, there are several strong differences.
- Project Scale: Freelancers and independent contractors differ in the scale of the task or project they can handle. Generally, independent contractors can handle tasks and projects of a larger magnitude than freelance workers. There is also the sensitivity of the task. Contractors have a stronger reputation than freelancers. So, the latter group is still a level below independent contractors when it comes to what task they can handle.
- Project Duration: Similar to how they differ in terms of project scale, contractors generally handle projects that are long-term. On the contrary, freelancers are perfect for short-term tasks. One reason for this is that contractors normally have more resources to work with compared to freelancers. Thus, the freelancer may be working with more than 5 clients simultaneously, but each of the tasks is short-term. By comparison, independent contractors usually only work with 2 or 3 clients at most, and each of the tasks they are handling would be long-term.
- Scope of Choice: Due to the factors of project scale and duration, freelancers have a wider range of choices and autonomy when they work with you. This means that they are more casual and even a little unconventional in the way they engage you. By comparison, independent contractors are more restrained in the way they work with you. Even though they are independent, you can think of them as bound by the same rules of work as you. They care about their reputations and consequently cannot be as open and unrestrained as their freelancing counterparts.
- Pricing Structure and Tempo: In terms of pricing structure, independent contractors are more likely to stick to a logical and well-organized framework. They account for everything they can do for you. Therefore, you don’t get a lot of bargaining room. In contrast, freelancers are largely less structured when it comes to pricing. They may not be able to explain why one task costs a bit more and a similar one costs a bit less. Furthermore, the way they increase their rates can be abrupt, whereas the pricing tempo of independent contractors is largely smoother.
- Work Location and Monitoring: Even though both contractors and freelancers can work from outside your organization, it is markedly easier to get contractors to work on-site. In other words, due to the differences between freelancers and contractors cited above, contractors may be interested in working with you directly rather than remotely. But freelancers almost never consider this option, unless the task requires them to. For them, being free from constant supervision is one of the fundamental conditions for their working with you.
You can delegate many jobs to independent contractors and freelancers. In truth, only a handful of jobs can be considered off-limits to them. Examples of typical freelancing jobs include:
- Data Analysts
- Graphic Designers
- Web Programmers
- Social media
- Virtual Assistants
You can assign any one of these jobs to independent contractors. That is why independent contractors may be described as a type of freelancer, but you cannot reverse the dynamic.
Examples of typical jobs for independent contractors include:
- Health services (doctors, nurses, dentists, veterinarians, and so on)
- Landscape architecture (interior and exterior design)
- Legal representation (lawyer, paralegal, and so on)
This is not to say that you can delegate only ‘serious’ projects to independent contractors and support tasks to freelancers. Once again, the difference is in the scale of the task at hand and the duration.
The Pros and Cons
There are many pros and cons to consider when choosing between freelancing or contracting.
- Freelancers and contractors typically have a lot of experience from working with different clients. This means that they are more likely to be flexible and innovative in their approach to task execution.
- Freelancers and contractors work outside the margins of your business, so they are not restricted in their viewpoint. Given enough information, they are more likely to see the big picture of what you do and why you do it compared to your formal employees.
- Freelancers and contractors have a stronger prospect of self-awareness, self-discipline, and personal growth. This means that you can squeeze much more productive work out of them than you can your formal employees. Furthermore, you can always expect them to deliver on each task on the basis of your contract agreement with them.
- Freelancers and contractors don’t work under typical workplace pressure. Therefore, their productivity will not be reduced as a result of anxiety or tension.
- Since you won’t be paying the same remunerations to freelancers and contractors as you do to full-time workers, you get to reduce employment costs.
- You can hire the best talents for the job since you can recruit freelancers and contractors from anywhere in the world.
- Freelancers are highly likely to deliver as much as you are willing to pay. In other words, you cannot expect them to go over and above your requirements. Therefore, even though they can be innovative and flexible, you may have to pay a bit extra for these bonuses.
- There is a limit to how much you can monitor the work of freelancers and contractors. They are allowed to work remotely, meaning that for the duration of the task, you may not be able to keep an eye on the progress of the work.
- Freelancers and contractors may not fully grasp your brand message and your products, leaving a gap in how they may service your clients, and in most cases, spread the word about your business.
Independent Contractor vs Freelancer: Tips on How to Choose Between Them
Knowing when to work with freelancers and when to work with independent contractors can be challenging. Here are some tips to remedy this difficulty.
- Consider the scale of the task or project:
Assign large and sensitive tasks to independent contractors. Freelancers can effectively handle anything else outside this box.
- Consider the duration of the task or project:
Freelancers are perfect for short-term projects, as long as these are not sensitive tasks (for example, medical or legal services). But when you have a long-term project, consider hiring an independent contractor.
- Take pricing and cost into account:
Freelancers are typically cheaper than independent contractors. The latter have firmer pricing structures, so they charge more for the same task that freelancers will charge little. So, consider your budget and what you can handle.
- Keep management and monitoring in mind:
Managing freelancers is quite different from managing contractors. Freelancers enjoy working as lone rangers, so you may not be able to monitor the progress of their work. On the other hand, independent contractors try to demonstrate that they are accountable and might even send you regular progress reports.
Traqq, a Tool for Freelancers and Contractors
One constant factor that underlies how effective freelancing and contracting can be is monitoring. You can tell from the article that although you can easily supervise the work of independent contractors compared to freelancers, it is still difficult to do that efficiently. This is why you should consider using an employee and time-tracking software application like Traqq.
Traqq offers you a lot of options for monitoring the work of on-site or remote employees, whether or not they are freelancers or independent workers. Furthermore, you can measure how productive they are per time, and automatically compile a payroll based on employee activity.
The tool also keeps workers at ease in terms of privacy. It preserves sensitive screen content so that even supervisors don’t have access to private information.
Using Traqq will save you a lot of time. As a result, you can maximize the work of your freelancers, independent contractors, and formal employees.