Is it right for you?
Over the past decade, the gig economy has grown exponentially. There's more freelance work available than ever before. When you do freelance work, you are not an employee of the company you're completing work for. Rather, you are considered an independent contractor. You pay your own taxes and set your own schedule as a business owner would. There are all sorts of freelance opportunities, from writing to dog sitting to delivering groceries.
Freelance work does come with great flexibility, but it's not necessarily for everyone. Here are some pros and cons to consider if you're thinking of becoming a freelancer.
Pros of Freelance Work
- You set your own hours.
In most cases, if a company sets the hours during which you work, they legally have to consider you an employee. So, if you're working on a freelance basis, you'll get to choose when you work. Yes, there may be some meetings you have to attend at certain times. But if you do your best writing at 10 pm or you need to take your child to school every morning at 8 am, you can squeeze your work in around those needs.
- You can work for various companies.
Some freelancers work for two or three clients. Others work for 20 different clients. Each new freelance opportunity is an opportunity to meet new people and make new connections. If you don't like working for a certain company, you can move on to a different one without giving up your entire income.
- You can travel.
Most freelance gigs these days can be completed online. As such, you can easily travel when working as a freelancer. You can travel to a new city for a week, do some work while you're there, and then move to a different city for another month. Even in the same city, you can work from your home, a coffee shop, or a shared workspace, depending on your preferences.
Cons of Freelance Work
- Taxes can be complicated.
Taxes are not withheld from your income as a freelancer. So, you'll need to set aside money for taxes yourself, and you'll need to pay your own taxes either quarterly or at the end of the year. There are a lot of tax credits and deductions you'll be eligible for as a freelancer, but you also have to pay more social security tax than you would pay if you were traditionally employed. Freelancers need good accountants!
- You must be self-motivated.
Finding work as a freelancer requires dedication. You have to put in the effort to find new clients, pitch work, and seek out new opportunities. If you're a real go-getter, this may come naturally to you, but many people do find it to be one of the more challenging aspects of freelancing.
- There are no benefits.
As a freelancer or gig worker, you do not get benefits such as health insurance, paid vacation, or a retirement fund. You will need to pay for your own health insurance and fund your own retirement, and while you can always take time off, you won't be paid for it. If you get benefits through a spouse, this may not be an issue, but it can be a bit challenging for many freelancers.
Freelance work can be a great option for breaking into an industry, expanding your skills, and earning some extra income with a flexible schedule. However, it is not for everyone. The complicated tax situation and lack of benefits are challenges, although many freelancers do find creative ways to overcome them.