What does it mean to be a freelancer? It might seem existential but we’re talking about the actual meaning of the term ‘freelance’. The definition is pretty straightforward:
Freelance /ˈfrēˌlans/ adjective
Synonyms: self-employed, independent contracting, side-hustle
Working on a contract, temporary basis. Contracts can be shorter than a single to as long as multiple years. Work can be done onsite or remotely, for a single client at a time or managing multiple projects at once. Freelance work can be performed as a main source of income or in addition to full-time employment.
That’s the literal meaning of the word but, as with pretty much everything, there are subtleties and practicalities that cannot be covered by a dictionary definition (although that definition was written by me and would never make it into any dictionary).
In practical terms, freelance is the midpoint on a spectrum between Employment and Business. In many ways, the distinction can be a very fine line between freelancer and employee as well as between freelancer and business owner. These distinctions, however, can affect the way we strategize and brand ourselves.
How a Freelancer is Different than a Full-Time Employee
As you may be aware, especially if you live in California, the legal definition of a freelancer continues to narrow. There are different legal tests that states employ to decide who qualifies as a freelancer. In the event that an employer has been treating a staff member as a freelancer when they should have classified that person as an employee, there can be serious consequences for the employer. Although the consequences are the burden of the employer, freelancers need to be aware of these concerns so that they know if there is anything they’re doing that makes them less attractive to clients. It’s worth looking up the criteria your state uses to define legal freelancer status so that you can make any adjustments needed to assuage the fears of potential clients.
In practical terms, a freelancer differs from an employee in 2 ways: contracts and temporary status. Every freelancer should have a contract with every single client. It’s something I’ve said time and again. In addition to just being the best way to conduct business, it’s almost a universal part of the legal tests to determine who qualifies as a freelancer. While employees may have contracts as well, a freelancer’s contract will outline the second difference, temporary status. Since freelance jobs can be a full-time commitment for months or years, they can exceed the length of some full-time employment. But it’s about expectation. While an employee relies on their employer, a freelancer understands that their work has an end date and they will need to be sourcing new work before their contract ends.
How a Freelancer is Different than a Business
The line that separates freelance and business may be even fainter than the one separating employment and freelance. I dedicate a good chunk of a module of my comprehensive course explaining the differences and why they’re important. In the interest of time, rather than going over everything about passive income and growth, I can try to abbreviate it to a single point.
A business can be sold.
A freelancer is obviously not able to sell their business because it’s solely reliant on them and their talent. Even if a freelancer starts working under a company name and subcontracts other freelancers to assist them on bigger jobs, they aren’t quite a business until their brand has the ability to stand on its own and thrive under different leadership.
The differences between employment statuses not only tell us which category we fall under but can inform the strategies we employ to succeed in our chosen role.