Contractor vs Freelancer: What’s The Difference?

a month ago   •   5 min read

By Zekeriya Mulbay
Table of contents

Working as a freelancer can be tough. There are the extra costs involved (i.e. travel, equipment, training), the risk of not getting the payment etc.

The divide between an independent contractor and an employee is becoming a grey area these days, particularly within The US and Europe. It's important to know what you're getting in terms of scope of work, responsibility and liability so you’re clear on who owns what.

What’s The Difference?

As we'll see further down in this article, our article will 'cut through the fog' and help you suss out if a freelancer or independent contractor is the best option for you.

If you accept a contractor or freelancer position at a freelancing platform, it's essential to understand what these terms represent and how they affect your income, hours, and schedule.

In this article, we'll look at the differences between freelancers and independent contractors so you can decide which is right for you.


Who is a Freelancer?

Freelancers are self-employed persons who pay their taxes (not those of their clients) and typically work for multiple employers.

They are responsible for things like:

  • Creating a newsletter template for a single small client;
  • Managing a project from start to finish;
  • Creating a logo design for a startup, and so on.

There are no actual limits as far as the extent of involvement, the size and scope of the task, and the contract length with a customer. However, because they are aware of market swings, freelancers will rarely rely on a single client or firm as their sole source of income. They have more job security since they have a more significant number of high-quality, long-term clients.


What is a Contractor?

The terms "independent contractor" and "freelancer" are frequently interchanged, but as you'll see, they're not interchangeable.

A contractor can:

  • choose their work hours
  • choose what work they want to do
  • market their services to attract new customers

They're also self-employed, which means they're in charge of their employee benefits (health insurance, disability insurance, income protection, unemployment insurance, and so on) and self-employment tax filings.


Difference between Independent Contractor vs. Freelancer

Accepting fresh clients

Freelancers often take on multiple clients simultaneously because most freelance work is part-time or has a limited scope. As a freelancer, you can take on as many clients as possible.

Accepting fresh clients

In addition, independent contractors can work with as many clients as they like. You can take on larger tasks as an independent contractor, which means you'll have fewer clients at any given moment.

You might work for an agency that works as a middleman between you and your clients in this position. You can still pick your clients carefully when working with an agency, but your direct client interactions may be limited.

Taking up new tasks

Freelancers have total control over which jobs they accept and which projects they reject. As a freelancer, you can focus on one or two main projects that consume most of your time. Instead of working on various modest projects, you can take on a few side gigs.

Taking up new tasks

You can choose your projects as an independent contractor. Contractors are more likely to take on projects with larger scopes and fewer workers than freelancers. Contractors may oversee a multifaceted project rather than execute a single product.

When you hire an agency, they will negotiate project scopes and expectations on your behalf.

Time frames are established

Freelance roles are set in stone. Freelancers may have jobs that last a few hours, a day, a week, a month, or even a year. As long as you work as a freelancer, all the positions you accept will be temporary.

Time frames are established

Independent contractors also work on a contract basis. On the other hand, independent contractors often accept work with more extended deadlines. Although independent contractors and their agencies typically specify project completion dates, these deadlines may be flexible or prolonged.

The type of task they perform

Though this isn't always the case, contractors' jobs are often distinct from those undertaken by freelancers.

Many businesses hire contractors to do recurring tasks. Analyzing data, providing security services, conducting repairs, and even managing teams are examples of these duties.

Google, for example, has a large contract workforce for critical jobs that must be regularly completed, such as coding, content screening, demos, and call handling. Companies frequently use competent, independent contractors to conduct IT services such as software upgrades, system maintenance, and data security.

Because businesses cannot restrict freelancers' timings, locations, or other work criteria, they are typically hired for non-recurring, irregular projects. Freelancers are extremely common in the marketing, media, and creative industries. Designers, content writers, marketing managers, UX/UI designers, and strategists frequently work for various customers as freelancers.

Here's a quick rundown of freelancers and contractors to help you understand the differences between these two terms:

Freelancer:

  • Can be set up as a sole trader or a limited company
  • Generally, works for many customers at once, sometimes on a per-hour or per-day basis
  • Usually works from home or own premises
  • Most popular in media, marketing, and creative industries

Contractor:

  • May be set up as a sole trader or a limited company
  • Usually works for one customer at a time, frequently full-time on a specific project for several months
  • Usually works in the client's office
  • Most familiar with the IT industry

To Sum Up

Whether you hire freelancers or independent contractors, the bottom line is that you must be able to get the most out of your external staff. Only by distinguishing between these two types of external workers will you be able to set expectations and brief them properly.

It can be tough to distinguish between these positions and titles. Still, you now have an inside look at the various roles, what they entail, and the critical differences between freelancers and contractors.

What do you do for a living? Are you a contractor or a freelancer? Let us know what you think in the comments!

Spread the word

Keep reading