If you’ve turned on the TV or browsed the web, you’ve heard the term “freelancer” mentioned at some point. This type of employment is quite common now, so you likely know some freelancers in your circle of friends. However, you might be thinking, “What is a freelancer exactly?” Well, we’re here to answer that question and provide some more details on freelancing.
This term commonly is used to say that someone works as an independent contractor. They do not have 1 specific employer. Instead, they do contract work for a variety of businesses. This might entail doing a one-time project that takes less than an hour or serving as a full-time team member for years.
In short, freelancers are used to solve specific problems. For example, a new business might hire a freelance web designer to help them get off the ground. After a few months, the freelance contract ends, and the business does not have to replace this worker since the website is up and running.
Why do Companies Use Freelancers?
Hiring a freelancer might be the answer to a few of your problems. Businesses turn to freelance workers for a variety of reasons. We’ll cover a few below.
As eluded to earlier, businesses can cut costs by hiring freelancers. This might include upfront costs as well as expenses over time. For immediate, short-term help, a freelance worker will help you avoid going through the hassle of placing an ad, interviewing employees, and filling the short-term position. A business might pay more for freelance help, but they avoid the additional costs that come with the traditional hiring process.
Also, freelancers do not have benefits in most cases. While the job may come with perks, employers do not have to provide insurance or other benefits that regular employees receive. With health insurance costs rising year after year, it may make more financial sense to label an employee as a freelancer to avoid the cost of benefits.
In some cases, employees are labeled “freelance” despite acting as a full-time team member. These people have no intention of leaving the job, but the company has given them this status to avoid certain costs. What is a freelancer supposed to do in this scenario?
Recent lawsuits have spurred conversation over what benefits independent contractors like this should receive.
Get Fast Help
Many businesses run into issues that need quick solutions. When no one in the office can handle the task, management may think of hiring new employees. As mentioned before, this process can be costly and long. Hiring a freelancer may be the smart choice.
By visiting a site like UpWork or FreeeUp, a company can find an independent contractor to form a solution. Once the issue is fixed, they can end the contract and be on their way. Paying someone a few hundred dollars to make a problem disappear is a worthwhile investment when your boss is breathing down your neck!
Save on Office Space
No one likes to feel cramped while working, which is why many people dream of having a large corner office. When a business needs help but cannot accommodate new employees, they have two choices: 1) get a bigger office or 2) hire a freelancer.
The business can put off moving to a new location by getting outside help. Thanks to the internet, this independent contractor can work on the other side of the world and still contribute. When the company is ready to grow, they can then hire a full-time member. Many times, they will offer the freelance worker the position first.
Access a Better Talent Pool
Job markets vary from city to city. Some areas, like San Francisco, may be full of tech-savvy people who understand programming and computers. Other places, such as rural towns, may have more blue-collar types. None of these workforces are better than the other unless you are looking for specific talent. In that case, you may be hard-pressed to find someone who is suitable to help your business.
For these situations, hiring a freelancer will let you tap into a global talent pool. Instead of settling for the few people who know coding in your area, you can interview hundreds of coders across the world. Now, you can be picky about who you take on to handle the work, creating a positive interaction for all partied involved.
What is a Freelancer’s Average Salary?
This is a common question seen across the web. People might turn to the internet to find freelance jobs at home but have no idea what type of pay they’ll receive. So, what is a freelancer worth?
To sum things up, there is no set salary. Your earning potential is endless!
According to ZipRecruiter, here are the average annual earnings of various freelancers:
- Administrative Support: $41,639
- Engineering: $79,867
- IT and Computers: $68,292
- Legal Services: $75,488
- Sales and Marketing: $61,572
- Writing: $61,419
You can read more about these figures at The Balance Small Business.
What Factors Affect Pay?
However, you need to consider several factors that may affect how much money you make freelancing.
These include but are not limited to:
For skills, you want to bring something to the table that few people offer. For an entry-level freelancer, this might not be all that much. One example would be a freelance writer. You are great with words and grammar, but so are millions of other people. You should develop certain skills within writing to differentiate yourself, such as copywriting or grant writing.
On the other hand, skills like computer programming or graphic design might fetch hire pay. It is difficult to gain these abilities, so companies often pay more for these services.
Your certifications can speak to your abilities. For digital marketing, completing the Google Analytics and Google Digital Marketing certifications look great on resumes. Other industries have similar credentials. Each item you can tack onto your resume will increase your earnings.
Experience is something that speaks for itself. Someone who hasn’t worked at all will not fair well against a freelancer with 20 years of experience. You don’t need to work for long to become a freelancer. Instead, you simply need to have worthwhile experiences that look great on paper and have improved your services in some way. As an entry-level web developer, you might get experience by creating websites for cheap or even free. If you are a freelance journalist, you can start writing stories about things that interest you. Maybe they won’t ever be published, but they can go in your portfolio.
Do Independent Contractors Pay Taxes?
Independent contractors do not have their taxes withheld when paid. Employers give them their pay, and it is the responsibility of the freelancer to pay their fair share of taxes. In most cases, it makes sense for these workers to file estimated taxes as if they were self-employed. These are paid quarterly.
That said, not all freelancers have to pay estimated taxes. This is only necessary if you will owe more than $1,000 in taxes for the year. Many people receive a 1099-MISC and add it to their annual taxes with no problem. They have to pay self-employment taxes, which includes Social Security and Medicare.
Want to Get Started Freelancing?
Working as a freelancer comes with many advantages, especially when it comes to flexibility and setting your own rates. You can work from anywhere in the world and make the most of lifestyle design.
However, you will have to make some sacrifices when starting your new role as a contractor. It is much like starting a new business. There will be ups and downs, but it will eventually pay off after putting in the hard work.
If you are thinking of taking the plunge into freelancing, be sure to read my guide on finding freelance online jobs as a beginner!