Independent Contractor vs. Freelancer

January 9, 2023
Man looking at a laptop

As you work in any industry, you’ll eventually come across people who work for a company without being a part of it. You’ll hear people talk about an independent contractor vs. freelancer, but you may not know their differences.

After all, both work for a company but not as employees, so do they have any notable differences? As you understand what makes a contractor vs. freelancer different, you’ll determine which career path you want to take.

What Is an Independent Contractor?

Before you start any side hustles and other assignments, you must understand what counts as an independent contractor. Independent contractors work as non-employees to perform work for businesses.

When you work as a contractor, you usually sign a contract agreeing to various terms, such as non-disclosure agreements (NDAs), to protect you and the business. For example, the business may have trade secrets, so it wants to protect them.

As you agree to the terms and listen to them, you’ll receive compensation for your work. You’ll receive pay based on what the company decides. Depending on the situation, you may have to make edits or changes to your services, but you can work everything out.

What Is a Freelancer?

As you think about independent contractor vs. freelancer options, you should see what you get as a freelancer. Instead of tackling projects or working consistently, you receive an assignment, complete it, and they’ll contact you when they want you to do more work.

For example, if you create a short video for a business, the business will pay you after you complete it. From there, they’ll reach out to you whenever they need more work done, so they don’t have to offer you consistent work.

They may sometimes have you sign a contract, but usually, you’ll go with a mutual agreement. You’ll send messages to each other, decide the terms, and receive your compensation. Once you complete the work, there’s no expectation for more assignments.

Understanding Differences

Since a contractor vs. freelancer has many similarities, you should learn the differences between them. After all, they have people working for businesses without becoming employed, so what makes them different?

  • The need for contracts
  • The expectations in place
  • The tax documents involved

Contractors must receive contracts to verify the work. Since they’ll work for a while and could work on various projects, they must remain protected through contracts. Freelancers might receive an email agreement between two parties, with the freelancer writing an invoice.

On top of that, you should expect consistent work from the business unless they reach out and cancel the contract. However, freelancers don’t expect businesses to keep sending work but to call on them as the business needs their assistance with projects and assignments.

If you work as a consistent contractor for a business, the business should send you tax forms based on the situation. Freelancers could also receive tax forms based on the case, so contact the company to see if they’ll send you a form.

The Pros of Each Option

Since your contractor vs. freelancer options vary, you must consider the positives of working for either job type. Doing so will help you determine if you should work as an independent contractor or look for freelance jobs. This consideration matters since you’ll want to find the right job type based on your preferences for the benefits. Ensure you review those pros, understand them, and decide what works for your situation.

Independent Contractor Pros

First, you’ll notice some excellent pros that make working as an independent contractor a superb choice over freelancer jobs.

  • Having a legally binding contract
  • Receiving consistent work
  • Focusing on longer projects

You can sign a legally binding contract between you and the business. That way, they come up with the terms and agree to them, so you’ll both remain protected. If you want to minimize problems with work, you’ll want to find a business hiring contractors.

You’ll also receive consistent work opportunities if you become a contractor. The contract will state how much work you do and how often, so you can make good money without looking for more work.

Since you sign a contract and receive compensation equal to the work, you can obtain long-term projects to make more money. Some businesses may offer you milestones, so you’ll receive payments as you work and progress on the assignments.

Freelancer Pros

While independent contractors provide significant benefits to make them an excellent option for your work needs, you’ll want to review the pros associated with freelancers.

  • Getting quick work
  • Taking assignments as you need them
  • Avoiding contracts

If you want quick and straightforward work you can tackle, you should go as a freelancer. Doing so will let you get through the assignments, receive compensation quickly, and get paid for your work. Since you won’t receive consistent work, you can take on assignments when you feel like it. Instead of expecting to work specific hours and on different assignments, you can either accept or reject work sent to you by the client. Some workers may not like contracts, so not having to sign one could work for your situation. For example, you may not want to worry about NDAs or similar tasks, so you’ll just work for them. However, you won’t have the protection of a contract.

Choosing the Best Option

If you plan to work as a sole proprietor or in specific industries, you must select the best option. Generally speaking, working as a contractor remains a solid option for most people, though you may want to work as a freelancer, depending on your situation.

Since contractor work gets you longer and more-consistent assignments, you’ll receive a consistent workflow. However, freelancing offers more flexibility since you don’t have to meet quotas or work specific hours.

Either way, both provide benefits to make them worth your time, so think about your situation and determine the best one. Generally speaking, you’ll want to be a contractor. If you do it as a hobby or side hustle, you may want to work as a freelancer. 

The two have crossover with freelancers and contractors working in both sectors. It comes down to what you need, so consider whether you want to work as an independent contractor vs. freelancer.

Get Lunafi for free to eliminate your freelance financial headaches and receive a $40 gift card on us!

Learn more
Download Lunafi

You might also like
this new related posts

Subscribe to our newsletter

Join thousands of subscribers and stay-up-to date on product updates, resources and tips and tricks for freelancers.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.