Freelancing means to work as an independent company rather than be employed by someone else. Freelancers are self-employed and often referred to as independent contractors.
Freelancers are hired by other companies on a part-time or short-term basis, but they do not receive the same compensation as full-time employees or have the same level of commitment to any particular company.
With the rise of the gig economy, people are talking about freelancing more than ever before. They are not only talking about it, many people are becoming freelancers too.
Freelancers accept payment in return for providing some sort of service. That agreement is generally part-time or short-term.
For example, if I hired a photographer to take new headshots for me, I could pay a freelancer for that session and that would be the end of it.
Sometimes people pay freelancers to work a set number of hours per week or per month. That arrangement is often referred to as a “retainer.”
A retainer refers to when you retain the services or right to someone’s time. A lot of legal professionals work on retainer. Every month, they bill a set amount of time to the client, regardless of whether that full time is used or not.
It’s really one of the simplest and most pure forms of entrepreneurship: the freelancer provides a specific service or outcome, and the buyer pays them a fee directly.
Freelancing provides a lot of flexibility and control to the individual. Most freelancers choose their own hours, the work that they do, the clients they work with, and may even be able to work remotely.
Freelancing is also a form of entrepreneurship, which means the freelancer has total control of their earning potential. Freelancers aren’t locked into a salary, and so they can earn as much as they are able to bill to their clients.
And as a freelancer, you are your own boss.
Freelancing provides a lot of variety in the type of work you can do, too. If you are someone with a lot of interests and are drawn to trying new things, freelancing can help you explore all kinds of projects and industries.
Historically, freelancing isn’t something people typically do forever. They either hire other freelancers or employees to build a full agency, they build their own products to replace their freelance income, or they go back to working full time.
Freelancing provides the flexibility many people want in order to figure out their next career move.
How much can I get paid freelancing?
According to that same 2019 study, the median freelance income is $20-28 per hour. Of course with so many different freelance jobs available, that number can vary quite a bit.
Transcription services may only earn $5-10 per hour, while software engineering roles may earn $75 or even hundreds of dollars per hour.
It’s best to compare the freelance rates of your particular skill set to get a good estimate of the expected income you could earn as a freelancer.
What are the risks of freelancing?
Freelancing comes with both financial and some health risks.
In the United States, one of the biggest benefits to full-time employment is access to healthcare and other financial benefits outside of your typical salary. That may include a 401K retirement plan or company-provided health insurance.
For freelancers, being hired as an independent contractor generally means companies will not provide those same financial or healthcare benefits to you.
So freelancers are on their own when it comes to planning for their financial futures and enrolling in health insurance coverage.
Not only are freelancers on their own to set these benefits up for themselves, but they are also at a bit of a disadvantage.
When a company negotiates a health insurance policy with a broker, they are often able to get more favorable rates since they are buying in bulk. But as a self-employed individual, you are buying a policy for yourself and your family only.
And, unfortunately, that means your health insurance may cost more.
It is easy to set up your own retirement savings account, but there will not be any matching contributions from your employer.
And finally, freelancers are responsible for all income coming into the business. If you are unable or unwilling to sell more projects and land more clients, your income will dry up.
These risks are all manageable, but they are worth considering before you jump into freelancing full-time.
A) Working with clients directly
B) Subcontracting
C) Jobs websites - e.g Fiverr
Source: Freelancing School
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