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.
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.