What's the Difference Between a Freelancer and an Independent Contractor?

When Ant Pugh posted his video on the three types of eLearning jobs, I thought he was spot-on with his descriptions. However, I objected when he combined independent contracting with freelancing. I thought they were different enough to warrant mentioning, so I promised to illuminate the differences.

When I was laid off my first job less than a year out of college, I spent about 5 months unemployed. It's hard to imagine now...at the time, if I'd had the benefit of today's Internet (or economy), or a clue about what it was that I really wanted to do with my life, that period of unemployment might have gone differently. As it was, I became more and more desperate to get back into work similar to what I had been doing. And finally, I was offered my first project as an independent contractor. 

In the US, the IRS has rules about whether a worker is classified as an employee or an independent contractor. As far as the IRS is concerned, there are only two types of work - as an employee and as an independent contractor. Ant's descriptions of the differences between developing eLearning for a bigger company internally, or working for an agency don't matter to the IRS; they are both considered employees. Companies don't withhold (and pay on the worker's behalf) any of the following for an independent contractor: income taxes, Social Security taxes, Medicare taxes and unemployment taxes. From a practical perspective (in the US), if you aren't considered a W-2 employee, then you are an independent contractor and must pay self-employment taxes. End of story. 

As I set out to write this blog post, I mostly considered my own experiences, and not just those where I paid self-employment taxes.  I've been an employee at small, medium, and large companies. I worked at a company where my department created content for the larger organization, and I've been an employee at an agency that created content for clients. One agency where I was an employee typecast me as the FrameMaker expert at the expense of my happiness with the job. And one agency where I came on board as an independent contractor to write storyboards gave me the opportunity to get started in eLearning because I'd learned Authorware on my own time and my own dime. My projects as an independent contractor include working for a big company, working for a small company and working for an agency. And I've been a freelancer for the last 13 years, for every size of company and agency. 

Yes, I'm of an age where I am encouraged to euphemize my experience as "extensive."  

When considering my insight on the differences between working as an independent contractor and working as a freelancer, I realized that it wasn't so much as they are two different types of experiences, but that they represent an entire spectrum of ways of working.

So instead of pointing out the differences, I'll bring up several points of consideration for anyone thinking of leaving the safety of a regular paycheck for the benefits of the great unknown world of self-employment.

1. Location. All of my experiences as an independent contractor required that I work onsite, and almost none of them have done so as a freelancer. With more and more employers allowing (or even embracing) remote work, perhaps this is changing. 
2. Schedule. All of my experiences as an independent contractor required that I work 40 hours a week (or nearly so) on that one project. When I started freelancing as a bridge from my stay-at-home mom life, one of the biggest appeals to me with freelancing was the ability to more-or-less set my own schedule. I started with a mere 10 hours a week on average. In the time since, I sometimes juggle as many as 7 clients and projects at once.  But, for the most part, I still get to chose when I do the work. On the other hand, my experiences as an independent contractor were much more 8-5.
3. Finding work. All of my experiences as an independent contractor were arranged through a recruiter or some other agency. When I decided to start freelancing, there were 3 online marketplaces that I watched, with plans to pay the membership fee to whichever one I got a project on first. That was Guru.com, a platform where I found as much work as I wanted for the next several years. But in the beginning, I took whatever I could, as long as it was somewhat related to my skills, and some of that work was very low paying. In the last few years, as I got more and more clear about who my target clients were, Guru became less and less useful. At the same time, I started a new profile on Upwork, where I've ended up finding some excellent clients doing exactly what I want to do. And now that I focus exclusively on customer education content development, I have new ways of getting work.
4. Equipment. With all of my experiences as an independent contractor, I was provided the tools I needed to get the job done. As a freelancer, I buy my own computer and have my own subscriptions to software. Often, I even get to choose how to best complete a job.
5. Fees. Hourly rates work well when there is some uncertainty on how long a project will take. As an independent contractor, I always worked for an hourly rate, which usually had little room for negotiation. On the other hand, projects priced at a fixed rate can account for the value that work will bring to a company, and freelancing "experts" will tell you to do this instead of "selling your time." The freelancer takes a bigger risk with a project fee, but what goes with that is the potential for greater rewards. I've had it go both ways when I charged project fees.
6. Help. I have hired help on a couple of my bigger assignments where I charged a project fee instead of an hourly rate. I know some freelancers can turn their niche and skill at acquiring projects into their best asset and get help from other freelancers in actually getting the work done. But after putting much thought into it, I realize that I don't aspire to own an agency or manage people.
7. Benefits. You usually won't get paid time off, health insurance or matching retirement savings either as an independent contractor or as a freelancer. I've made sure to plan accordingly on these issues.

There are a wide range of possible experiences when you set out on your own. In spite of the possibility for a more consistent income, I've passed on a number of independent contractor opportunities over the years, partly because I didn't want to be stuck doing that same assignment for several months.

​A final point of consideration is career development. A few years ago, I thought about going back to school for a master's degree and decided ultimately that my clients usually didn't care if I had an advanced degree. Instead, I've obtained certifications and I read extensively in my field to stay informed. I learned early on that I'm the only person in charge of my professional development, and the type of work I say "yes" to can reflect that, as well as providing opportunities to stretch my skills. If you are thinking of striking out on your own, make sure you plan for time in your schedule to keep improving.

There's no shortage of advice for aspiring freelancers, but it's not for everyone. Here's an article I read recently that can help you set your expectations.