What’s the difference between a freelancer, employee and independent contractor?

Published on 2019-06-10 by useme.

Understanding the variations between the above working or cooperating models are important for companies or flexible workers. How can one properly differentiate roles, responsibilities and supervision methods among flexible workers and employees to benefit each party?

The prime difference is the legal one and it has fundamental consequences as far as taxes, costs and other public tributes are concerned. The distinction between a freelancer and an employee comes down to how much control or authority a firm has over an individual and his or her work. Basically speaking, independent contractors are entrepreneurs running small sized businesses. So, he or she is not an enterprise’s employee but one of clients. So, a contractor has no boss or manager forcing what shall be done each day and how it should be done. One is free to do business with as many firms as he or she wants and usually has his or her own business card, a visible business location - own office or a venue in a coworking space.

Independent contractors usually make their own schedules, do marketing for their own company, decide on their own if he or she wants to work 5 or 15 hours per day, and are available to work in the relevant market. He or she brings to a client’s his or her own equipment, e.g. computer to use for work.

One doesn’t require either long and comprehensive training or detailed instructions on how to do everyday work due to the fact he or she is an experienced professional offering skilled services. An independent contractor probably has unique and specialized skills, such as content creating, e.g. graphic designing, or coding which is not a part of a client’s prime income. Usually, he or she gets paid a flat fee for work, or charges by the hour. So, freelancers are independent contractors. But there is no legal term such as “freelancer”. It is generally used to characterize independent contractors who work in creative areas serving numerous clients and staying flexible over their schedule.

Enterprises working with independent contractors don’t have to pay the minimum wage, overtime, workers’ compensation, taxes for a contractor’s Social Security, Medicare, unemployment benefits, and health insurance premiums. Freelancers can’t join a labor union due to the fact that only employees can do it.

An employee is an individual who works a certain number of hours per week, usually in the same venue, under the supervision of a manager who has a direct control over him or her and a work that has been performed.