Working as Freelancer vs Independent Contractor

While freelancers and independent contractors share similarities, such as being self-employed (by using an Individual Taxpayer Identification Number, which undocumented immigrants can obtain) and not bound by traditional employment relationships, there are key distinctions between the two.

Freelancer

• Definition: A freelancer is a self-employed individual who offers services to multiple clients, often working on a project-by-project basis.

• Characteristics:

  • Typically handles short-term or one-off projects.

  • Often works in creative or specialized fields such as writing, graphic design, programming, or consulting.

  • Sets their rates and negotiates directly with clients.

  • Can work for several clients simultaneously.

  • Has more control over the type of work they take on and their schedule.

• Platform Use: Freelancers often use platforms like Fiverr, Upwork, or Toptal to find clients.

Independent Contractor

• Definition: An independent contractor is a self-employed individual or business entity contracted to perform work or provide services for another party under a contractual agreement.

• Characteristics:

  • Often engaged for specific projects, roles, or services, sometimes over a longer term.

  • May work exclusively for one client or business for the duration of a contract.

  • Operates under agreed terms but has control over how the work is performed (subject to the contract).

  • Often subject to more formal agreements, including deadlines and deliverables.

  • The independent contractor may be paid an hourly rate or a flat fee.

Key Differences

Aspect	Freelancer	Independent Contractor
Client Relationships	Works with multiple clients.	Often works with one or a few clients.
Work Scope	Focused on smaller, shorter projects.	Handles broader or more extensive projects.
Contractual Nature	May not always have formal contracts.	Usually operates under formal contracts.
Examples	Writers, graphic designers, developers.	Consultants, builders, IT specialists.

Similarities

• Both are considered self-employed for tax purposes.

• Responsible for paying their own taxes, including self-employment taxes.

• No entitlement to employee benefits like health insurance, paid time off, or retirement plans unless provided by a client through special arrangements.

Choosing between being a freelancer or an independent contractor depends on your preferences for work structure, client relationships, and the nature of projects you'd like to pursue. Both paths offer flexibility and opportunities for those looking to be their own boss.

Note: Please do not complete the hiring process only to request freelance or independent contractor status at the last step. Traditional employment and freelancing/independent contracting are fundamentally different. Freelancers and independent contractors enjoy greater flexibility, including the ability to set their own hours and compensation rates. If you prefer this type of work arrangement, it’s best to communicate your interest in freelancing or independent contracting early in the process rather than at the final stage. HOWEVER Federal law prohibits individuals or businesses from contracting with an independent contractor knowing that the independent contractor is not authorized to work in the U.S.