The U.S. economy has always had room for independent contractors, but this marketplace has exploded over the past years and many refer to it as the “gig economy.” Forces like evolving technology and the pandemic have created countless opportunities for freelancers to find flexible work, and many are busy enough to turn real profits.
U.S. News posts that the rise of cellphones originally led to this working trend, as people started offering their services at reduced costs due to less overhead. Employers can benefit from paying independent contractors less than their full-time workers, but what’s really in it for freelancers?
Pros of Being an Independent Contractor
According to Nolo, the most obvious advantage of being a freelancer is that you can be your own boss. You are not subject to anyone else’s hiring or firing decisions, and you can give yourself raises on your own terms. No more rushing to be at your desk at 9 a.m. or having someone peeking over your shoulder. Another great thing about being a freelancer is that you don’t have to deal with office politics. Workplace gossip and annoying co-workers really affect job performance and can make workdays very stressful – who needs that?
When you work on your own, you can also have the flexibility to work when and where you want. Of course, there will be deadlines and quotas to meet, but you can start and end your workday later, take a day off and make it up on the weekend and wear your pjs all day long. Vacation time and days off can be taken at your discretion, but you will probably not be paid for it. Just be sure to plan for that in advance by working more or saving up your money.
Independent contractors also set their own rates, which can be higher than what they’d be paid for doing the same work for an employer: Some experts claim that freelancers can earn up to 40% more per hour compared to doing the same thing full time. This is often true because employers (now your clients) don’t need to pay employee benefits, worker’s compensation, unemployment compensation taxes or Social Security taxes when they pay independent contractors. Those savings can be passed on to you. Of course, how much you're paid is a matter of negotiation between you and your clients.
Cons of Being an Independent Contractor
The main downside of being a freelancer is that you have to sell your services constantly, at least until you have a few steady clients that send you work regularly. Many people are able to leave their employers and clients will want to follow them, but this can get you into hot water when there are no-compete clauses and other legalities to prevent workers from doing that. It is not hard to find freelance work online, and there are plenty of niche websites for different industries, plus others that are more comprehensive.
Webflow lists their favorite sites for finding freelance work. Some like Upwork have a large variety of opportunities across different industries, while Designhill targets freelance designers. Toptal has a very rigorous screening process, so this may not be the best choice for entry-level independent contractors. We Work Remotely, Behance and People Per Hour are three other sites you can try. It can take a long time to scroll through all the postings, though.
Another disadvantage of being an independent contractor is the administrative work that goes along with it. Zen Business points out that freelancers are responsible for keeping track of their invoicing, expenses and self-employment taxes. You can certainly hire a professional to do this for you, but that will take away from your profits. The best advice is to set up a system from the start and to schedule days and times to complete this work. You’ll need to keep this organized, and once it becomes part of your routine it should be easy.
What if My Client Doesn’t Pay on Time?
Ahh, the last con of being an independent contractor: clients who don’t want to pay you on time. This is an unfortunate reality of freelancing but it is the exception, not the rule. To prevent this from happening, research the companies that make you offers. Some will include the payment information, and with others, it can be like pulling out teeth. If they seem evasive, it is best to look elsewhere. When you agree on a rate, be sure to get everything in writing – include the work to be completed, the amount that will be due and the date.
When clients do not pay by the agreed date, interaction-design recommends giving them the benefit of the doubt. You can resubmit the invoice with a polite reminder; if they don’t respond, wait a week and send another one with a firmer message. The next step would be to ask a lawyer to send the client a note about the missed payment, informing them that the next step would be legal action.
Should all of this not be worth the trouble, you can write off the loss and be more careful the next time. This can sound discouraging, but in most cases, clients do pay on time and you won’t have to worry about this. It is important to know what steps to take just in case.