Freelancer Definition

A freelancer is a self-employed individual who offers services or work to clients on a project-by-project basis, typically without a long-term employment contract.

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Many of us are looking for more flexibility in our professional lives than the traditional nine-to-five job has historically offered. With technology and market changes, this flexibility is becoming increasingly easy in some ways but not in others. Freelancer and gig work are ways to make a living while setting your own schedule and work priorities. 

So, what is this type of work all about? Like the nature of the work, the freelancer/gig worker definition is flexible. Read on for a quick review. 

What is a Freelancer/Gig Worker? 

A freelancer/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. Freelancer/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–like ridesharing apps–to find patrons.

Freelancers

Torpey and Hogan define freelancers as independent contractors. Many 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. 

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Being or Hiring a Freelancer/Gig Worker: Advantages

Entering the freelancer or gig worker economy has its benefits for both the hirers and the workers. Many freelancers/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/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 tend to already be well trained and have their own materials for completing tasks. By hiring such workers, a business can use the time and money it saves and put it toward business development. Or better yet, they can count the savings as profit. 

Being or Hiring a Freelancer/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 bring a lot of flexibility to the 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. 

We can help

Maybe you want to create your own business out of doing freelance/gig work. Maybe you want to hire freelancers/gig workers for your business. Either way, we have the services to help. 

Our Business Formation Service can help make starting your own business quick and easy. With ZenBusiness Money, freelancers, gig workers, and other business owners can manage their finances in a snap! And if you start your own business, we can help you keep it legally compliant with our Worry-Free Compliance Service. If you have a dream, we can provide support.  

Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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