What is the difference between freelancing and being employed?

Accountability is the biggest difference between freelancing and being employed. You are accountable only to yourself not to a boss or company.

Other key differences are outlined below. It’s important to properly reflect on these differences because they impact your day-to-day. You need to decide what suits you and is manageable. We will discuss this further in the next step about your freelance boundaries.

Pay

Freelancers don’t receive a monthly salary with deductions for income tax, national insurance, pension, or student loans.

But you also don’t have an employer offering you long-term work in return for set working hours and responsibilities.

As a freelancer, you are paid only for the work you source and complete, and that pay is only received after submitting a valid invoice. You will have to fill in forms with the organisations you work for, and often be set up on their finance system. So there are some extra hoops to jump through. You will be paid in accordance with their payment terms.

When you receive the money, you are accountable for setting aside money for taxes and your pension.

Organise your own time

Another key difference is that there are no set hours. You can work when you need to or when you want to. You are your own boss. If you want to have a lie in one day, you can choose to do this. If you don’t want to work Monday – Friday, 9-5, you don’t necessarily have to. You can develop your own routine.

Holiday pay

In the past, freelancing was generally ‘no work no pay’. But now some freelancers accrue holiday pay as part of their freelance contracts. It depends on where you live and the sector you work in.

Freedom

Many freelancers relish one key thing. The work you do is not dictated to you by someone else. You get to decide the work you do, and no one is clock-watching or monitoring your output.

Pension

When freelancing it can be hard to put aside a consistent amount of money on a regular basis into a pension when your income is not stable. You are accountable for researching and setting up your pension.

Alison’s view

The final difference is having responsibility for the tools of your trade. You are hired to deliver a service and must have the tools at your disposal to provide that service. It’s up to you to keep those tools in good working order. You expect a plumber to turn up with all the necessary tools to fix a leak. The same goes for you – whether that be technological software or physical tools.