Gig freelancing and independent contracting offer the kind of flexibility and freedom you don’t often get with regular nine to five jobs.
However, both aren’t the same.
As a freelancer, you can set your schedule, be your own boss, and even run some side hustles on top of a full-time job.
If you’re a contractor, you can work on projects and earn a regular salary within your contract’s timeframe. Depending on your contract terms, you might not be allowed to work for other companies within the project’s duration.
Read this guide to learn more about the differences between gig freelancing and contracting and see which works best for the career path you want to take.
Defining freelancers and contract workers
A gig freelancer is a self-employed, non-permanent worker who offers services (and products) to various companies, organizations, and individuals simultaneously.
Some of the most popular gig freelancing jobs include web development, video production, web content writing, and other specific work such as quickly designing a winning resume. Gig freelancers will often make use of sites such as Fiverr and Upwork to pick up gigs.
As a freelance worker, you can take on as many clients and projects as your schedule allows, set your rates, work where you want, and process tax payments independently (among others).
On the other hand, contract workers or independent contractors are temporary employees who take on large projects, usually for long-term clients.
Most contractors work on a project basis, typically between a few months to several years, and are not allowed to work for other companies (depending on the contract terms).
Unlike freelance ‘gig’ workers who usually get paid based on each gig or project, contractors can get a fixed monthly salary and a bonus.
As a contractor, you may work in your own workspace or on-site in your client’s office. You might also accept clients through an agency.
As a contractor working at the other end of the gig economy and in a deeply embedded relationship with your clients, you must ensure you are truly independent. Failing to do so could run the risk of contractor misclassification, which can result in you not getting paid time off, health insurance coverage, and other benefits due to you.
Main differences between gig freelancing and contracting
Both gig freelancers and contractors can have greater professional and financial independence than regular, full-time employees.
However, independent contractors and freelance workers have several key differences you should consider before choosing which one to work as, including the following.
As a freelancer, you have almost complete control over choosing jobs to accept and reject.
For instance, you can decide to work on one or two major projects that eat up most of your work hours or take on a broader range of small projects or several side jobs.
If you’re an independent contractor, you can also choose which projects to work on, but unlike most freelancers, contracting jobs are much larger in scope and lower in numbers.
For example, you can work as a contractor who oversees a whole multi-faceted project instead of handling a single deliverable.
While freelancing requires you to meet specific deadlines, you have control over your work schedule as long as you adhere to the set timeline.
Working as an independent contractor often requires a schedule similar to a traditional employee but with a bit more flexibility.
For instance, you could work from nine to five or set a flexible schedule that works for you and the company you work for.
Most freelance jobs are part-time and limited in scope, allowing you to work on several projects and take on more than one client at once (and as your schedule allows).
As a contractor, you can work with many clients as long as you don’t violate the contract terms with other clients.
However, since most project scopes are usually much larger than those freelancers work on, you might need to limit your workload and the number of clients you take on at a time.
Working as a freelancer means you’re in charge of setting your rates. You can either charge by the hour or based on your output (depending on the project).
Either way, you’re responsible for setting and negotiating rates with each client, including managing your invoicing and following up payments.
As a contractor, you would work according to an hourly or project-based rate that can vary depending on the client or job.
However, if you work independently, you can have more control over negotiating and setting your rates and even handle your invoicing.
If you work through an agency, you can rely on the agency to secure the appropriate rate for each job.
Establishing deadlines and time frames
Freelance jobs usually have predetermined time frames. While temporary, your job could last for a day, week, month, or year depending on the project.
Working as an independent contractor also means taking on temporary roles, but most contracting jobs have longer time frames.
Also, while you, your agency, and the company you work with will almost always set project end dates, the time frames can be extendable or flexible as the need arises.
Whether working as a contractor or freelancer, you can deal with income taxes since both roles require self-employment tax payments.
You can get a 1099 form from each of your clients by the end of the tax year and pay your taxes quarterly.
Dealing with benefits
As a gig freelance worker or contractor, you are responsible for supplying your own benefits, from retirement contributions and paid vacations to health insurance. Essentially, you serve as your Human Resources (HR) department.
For instance, you can include the cost of taking time off into your rate if your clients are not likely to provide paid vacations.
Also, you can assess business or health insurance requirements, handle them independently, and incorporate the costs into your rates.
Whether you work as a freelancer or independent contractor, you are responsible for almost everything, such as education costs, conference fees, travel expenses, and office supplies.
Before signing a contracting or freelancing agreement with your clients, consider any expected expenses carefully.
Some clients might cover travel-related costs and other essential expenses. However, you might need to incorporate optional expenses such as continuing education costs and conference fees into your standard rate.
Choosing work locations
Working freelance means you can work anywhere you want, from your home office, rented office space within your local area, or even public places, including libraries and cafes.
Working as an independent contractor can also give you this flexibility by negotiating your work location for each of your projects. You can work in your client’s company office or in a workspace you maintain.
Is gig freelancing or contracting for you?
It’s critical to know the difference between gig freelancing and contracting because of essential and specific factors that impact your employee benefits entitlement, income stability, and the ability to secure a permanent role with employers.
Learn the crucial things you need to know from this guide to help you determine which approach works best for you.
Whether you work as a freelancer or independent contractor, the right approach can help you gain new experiences (and skills), expand your network, and find more job opportunities in the future.
Cover Image Source: Unsplash