To Freelance Or Not To Freelance: That Is The Question

There are several factors to consider when deciding whether or not to declare yourself an independent contractor as opposed to a company employee.

Some of these considerations are personal (you like to be your own boss) and some are professional (you can earn more by streamlining production and taking on more clients).

There is also a side-question of whether or not you are a freelance worker by choice or because there are no other choices. As the Great Recession and its aftermath made it abundantly clear, the landscape of the American workforce is in flux and hit some permanent rough patches that include corporations cutting back on labor.

This sidebar, however, comes with a very real caveat, which is to say that employers have found out the benefits of forcing their workers to accept freelance contracts, which takes away serious financial and human service obligations associated with hiring employees. If it is cheaper and the Internet provides adequate cover, then why not send employees home, skip paying healthcare benefits, skip taking out funds for Social Security, Medicare and Worker’s Compensation, and dispense with the annual employee picnic.

With so much economic incentive to dismissing their employees and hiring contracted workers (think of all the parking spaces it frees up), then there is no wonder why employers force the point to excess. Sometimes, that is to say, they flat out get it wrong.

That said, remember, as you run through these pros and cons, the decision of whether or not you are a freelancing independent contractor or an employee may not be yours to make. Especially if you are the company hiring the freelance independent, you could find yourself in serious financial trouble if you get the designation wrong.

I have personal experience to back this up. Despite a written contract and assertions from the hiring company and from every other employee in a news organization, the U.S. Department of Labor, after a job of mine had ended, declared that for six years I had been misclassified as an contracted freelance worker, declaring, instead, that I was a company employee. This decision obligated my former employee to make up for years of back taxes and penalties that went along with that. In addition, they had to make amends for missing Social Security, Medicare and unemployment benefits contributions for myself and several other misclassified workers. And through all this, not one of my co-workers agreed with the decision handed down in court. In other words, even very intelligent people have been known to miss-classify employees and freelance workers, but the implications for getting it wrong could be severe.

Still, there are various reasons you may prefer to be an independent contractor. And these are valid regardless of what the hiring company may desire.

PROS

• You choose how the work is done
• The contracting company can say they want so much done at a certain time and to specifications they create, but how you get that done, if you are an independent, is up to you.
• You can moonlight all you like
• If you work for yourself, as an freelancing independent, there is no reason you can’t work for other clients at the same time.
• You can work from home
• An increasing number of employers allow their workers to work from home, but if you are an independent contractor, then you always have that option. You are the boss.
• No one can tell you what to do
• Take a break when you want … do what you want. You work for yourself. While that freedom is hard for some to get used to, for others, this is a great benefit. Oh – and no one can demote you or fire you, either, although you are bound by contractual obligations.
• Choose your own benefits
• If you work for yourself, you will find out just how expensive healthcare insurance might be, but the plan you choose is up to you, not the contracting company.
• These are just some of many benefits you might find if you work for yourself. In so many words, if you are an independent freelancer working under contract, you are your own boss.
• Work in your pajamas
• Every day is dress down day if you work at home. (A word of advice from someone with experience: wait until you have solid work habits established before you begin to cut back on the rituals of work.)
• Freedom to move
• Many jobs rely on a laptop and the Internet. It doesn’t matter if you work in Britain one day, San Francisco the next and Tokyo the next. Where the wind blows, if there’s Internet, that’s where I’ll be.

CONS

• Working for yourself is not always a bed of roses. It takes discipline, dedication and, instead of answering to a boss, you do have to answer to the contract that you may have signed for the product or service you provide.
• Here are some other negatives to being an independent
• No Workman’s Compensation Insurance
• Unless you chose to form a company and call yourself your own employee, you might not be obligated to carry worker’s compensation insurance, which can be considered a big loss. After all, the worker’s compensation insurance pool is enormous, making the rates far better than insurances with equal benefits. Further, worker’s compensation covers all medical bills for an employee with a work-related injury, as well as partial payment of missed wages and a payout for any permanent affliction that was the result of an injury at work.
• No co-workers
• Independent contractors can work on-site and run into co-workers, but many home-working independent freelance workers give up the social time that work allows – even the friendship of workers during non-work hours.
• No one says slow down
• If you work for yourself, setting boundaries can be difficult. No one says, “Go home; take the weekend off and go sailing.” Freelance workers, as such, find themselves working all night long or on Saturdays and Sundays, because there is no one to say, “take a break.”
• Pay Day
• Say this about a paycheck: They tend to show up with some regularity. This might not be so if you freelance. Long term contracts can be set up with regular pay, but there are also contracts that include no pay until the work is done – and sometimes there’s a grace period after that.
• To go along with this, checks from an employer don’t tend to bounce or not show up as often as checks from a client. If a client skips out on a payment, there may be very few options for collecting what’s you are owed.