Freelancer Definition

Many professionals want to have more flexibility in their day-to-day lives than the traditional nine-to-five job offers. Thanks to technology and market changes, flexibility is more accessible; it’s become very attainable to join the gig worker economy and become a freelancer.

But what is gig work all about? This guide gives a quick review of what freelance work is, its benefits and drawbacks, and more.

What is a freelancer or gig worker?

A freelancer or gig worker, by definition, can be many things.

Gig Workers

According to Elka Torpey and Andrew Hogan (Torpey and Hogan) of the U.S. Bureau of Labor Statistics, a gig worker is someone who provides on-demand work to other businesses or individuals. Gig worker examples could include:

• Self-employed individuals who run small and unincorporated businesses without employees 
• Professionals who complete one-time projects for clients
• Other individuals who complete single tasks for customers and businesses 

Some gig workers find clientele for their products and services on their own through ads and networking. Other gig workers use matching apps (not dissimilar to ridesharing apps) to find patrons.

Freelancers

Torpey and Hogan define freelancers as independent contractors. Many businesses use independent contractors to get work done to avoid the costs of providing employee benefits. According to the IRS, an independent contractor (i.e., freelancer) is someone who:

• Has the right to control what kind of work they do and how they do it
• Has control over the financial aspects of their work
• Doesn’t have a formal relationship with another business that includes employee benefits like insurance, retirement, or vacation pay

In many cases, a freelancer offers their services on a regular basis, but they don’t receive employee benefits, and they’re free to provide work to multiple businesses simultaneously. A good example would be an accountant who performs accounting services for multiple businesses only once a quarter. 

Being or Hiring a Freelancer or Gig Worker: Advantages

Entering the freelancer or gig worker economy has its benefits for both the hirers and the workers. Many freelancers and gig workers enjoy: 

• The ability to choose only the work projects they want
• Flexible schedules that allow them to take multiple jobs and address personal matters whenever they choose
• The ability to set their own prices

The benefits of freelance/gig work could also make it easier for workers to avoid burnout. 

Those who hire freelancers or gig workers could experience the following benefits:

• Spending less money on employee benefits
• Expending less time managing employee matters
• Spending less money on materials and equipment for work projects

Freelance and gig workers are often well-trained and already have their own materials to complete tasks. By hiring such workers, a business can use the time and money it saves to invest in business development. Or better yet, they can count the savings as profit. 

Being or Hiring a Freelancer or Gig Worker: Disadvantages

Like any other business arrangement, freelance and gig work have drawbacks. 

Disadvantages for those who do freelance or gig work include:

• The need to pay for their own benefits (e.g., health insurance and retirement)
• Unpredictable income
• The need to buy their own work materials 
• Extra tax work (paying their own income and self-employment taxes)

However, with proper planning and organization, gig and freelance workers can minimize these disadvantages. 

Disadvantages for those who hire freelance or gig workers include:

• Unpredictable worker availability
• Less control over when, how, and where the work is done 

Sometimes hiring a gig worker or freelancer requires the hiring business to be more flexible with deadlines and have a higher level of trust in the worker. 

Summary

Freelancers and gig workers aren’t traditional employees. Rather, these types of workers complete tasks for others on demand. This working arrangement can offer significant flexibility to workers and help hirers cut costs. However, this arrangement can also mean unpredictable income for workers and unpredictable worker availability for hirers. Often, the keys to making these arrangements work are organization, good planning, and mutual trust. 

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• Should a Freelancer Form an LLC or Corporation?

ZenBusiness Can Help

Many people who are interested in doing their own freelance work decide to start their own business for that venture. ZenBusiness can help make that a reality quickly and easily with the ZenBusiness Formation Plans. Their financial platform, ZenBusiness Money Pro, can also help freelancers, gig workers, and even the companies that hire them manage their finances in a snap. Their Worry-Free Compliance Service even simplifies annual compliance tasks so it’s easier to keep a company compliant all year long.