Freelance Or Fixed-Time Job: What Option Will Benefit Your Pocket?
Not long ago, recent graduates who wanted to enter the workforce expected they would go to school, learn a trade, find a job and work there until retirement. Recent shifts in the economy have created new opportunities for individuals and employees to tailor their working environments to maximize their returns. Along with full-time employment, an increase in contracting and freelancing positions have opened new doors for job-hoppers and career switchers, who are quickly becoming the norm.
Employers and employees alike view the traditional employee-employer relationship differently. Employers are identifying tasks that they want be completed and are looking internally and externally for people with the right set of skills to get it done.
According to the Freelancer’s Union, one-third of working Americans is now employer-independent, working in some capacity either on contract or as a freelancer.
Contract vs Freelance vs Full-Time
Technology, volatile economics and a fundamental shift in the culture of millennials have been driving changes to the new workplace. Most companies and employees don’t even make tenure or retirement plans a serious consideration when they are looking at new job positions.
Your Employment Options
Full-time employees work for one company and are paid either a monthly salary or an hourly wage. The major advantages of full-time employment are that the employer handles all the tax reporting and provides the employee with work benefits such as health insurance, 401K, paid vacation time and sick days.
When an employee accepts a position at a company, they enter into an open-ended agreement in terms of time — both parties work together indefinitely, however, either side can terminate the contract when the working conditions no longer suit them. As a result, many employers have a probationary period that lasts for 3 to 12 months for the new employee to prove themselves before they transition into a full-term position.
Employees have more freedom to terminate the employment contract as they are protected by laws in the U.S. from unfair discrimination and unsuitable working conditions. However, they are not immune to layoffs, downsizing or buyouts.
If an employee is paid a salary they are expected to complete their tasks in a given month which means that unpaid overtime may be required.
Freelancers and contractors have more of a client relationship with companies. Even though the work that they complete can often be very similar to that of full-time employees, either freelancers or contractors are paid for vacation time, sick leave or for other time off.
Generally, freelancers are hired to complete a specific project, making the relationship and timeframe very straightforward. Freelancers are self-employed so they are expected to report and withhold their own taxes and track their own tax deductions. They periodically submit invoices to their clients for payment and do not receive any special employee benefits from the clients or companies that they work with.
It is not unusual for a freelancer to juggle many clients at once, working on multiple smaller projects. Because of the short-term nature of the projects they work on, the most effective freelancers are not always the ones who are most effective at their actual work, but the ones that most effectively market themselves and network to find new clients.
Independent contractors can sometimes work just like freelancers, with multiple clients on a per-project basis. It is more common, however, for contractors to work for a single company at a time for an extended period and they are paid by the hour. At the beginning of the contract, all the terms are set out including the hourly rate, length of the contract and when and how the contractor will be paid.
Because the terms of payment are laid out in the contract, they do not need to submit invoices for work completed, but the contractor is still responsible for their own taxes and are not paid for vacation time, corporate holidays or any other time off. Sometimes contractor are expected to show up at an office or they may be able to work remotely.
It is also becoming common practice for companies to hire people for short-term contracts as a type of probation that can lead to full-time employment with the company.
Wrapping it up
It is important to note that these roles are not mutually exclusive and is it becoming fairly common for full-time employees to moonlight as freelancers or as contractors. This can be a very effective way to expand one’s skill set as long as they are sure to resolve any potential conflicts of interest first.
Choosing between full-time employment and freelance/contract work should be an entirely individual decision that depends on personal career goals, overall life goals, the family situation, location, the local economy, and work style.
For people moving into a new sphere, freelance and contract work can be a great way to start out and quickly build a variety of experience in a relatively short period of time. Once they have a more comprehensive portfolio, they can try to move into a permanent full-time position or, continue enjoying a satisfying, lucrative career as an independent freelancer or contractor.
Having said that, there is a lot to be said for a stable paycheck, and clear, long-term work that a full-time position with a stable company can provide.
Simply knowing that freelance, contract, and full-time employment are real options adds an additional layer of job security.
In the end, it is worth trying several avenues before planning out your whole career. Whether you end up with a full-time position moonlighting on the side to jumpstart your career or as a footloose freelancer with fingers in many different pies you are sure to find something tailored to your personality.
What matters most is that you enjoy what you do. If the work is interesting, the projects you take on help build your skills and advance your career, and the money meets your financial needs, there’s no real advantage to taking one route over another.
Featured image credit: PEXELS