The difference between freelance vs. employee is something that every creative entrepreneur needs to know. It’s important for your finances, the scope of your role, and so that you can make the best decision for YOUR unique needs. 

So many people don’t understand that being a freelancer and being an employee are entirely different. There are benefits and drawbacks to each, but it’s important to at least know the characteristics of freelance vs. employee. 

Freelance vs. Employee: What's The Difference and Which Is Better? | Heal My Muse

Establishing some definitions: freelance vs. employee

In order to have positive, clear relationships with your clients, you need to know your role inside and out. Even more important, you need to know if the role you’re in is right for you, personally, professionally, and financially. 

Let’s start off by establishing some definitions of freelance vs. employee. 

What is a freelancer?

Freelancers are fully self-employed. As a freelancer, you are in charge of your own income tax (called self-employment tax). Typically, you won’t have employees, but you can outsource work or bring on a team if you’d like. 

As a freelancer, you fully control where you work, so if you want to work remotely, this could be perfect for you. You’ll also manage your own hours and be able to complete work when you want to. 

Freelancers don’t receive company benefits like health care or insurance. But you can take on a number of different clients and projects simultaneously to diversify your work and boost your income! 

Many times, a freelancer works on either short-term, small projects with a client, or on a monthly retainer basis for consistent work. You’ll set your own rates (including whether to charge hourly or by the project) and can increase or decrease them at any time. 

There are lots of different niches for freelancers, like editing, website development, graphic design, copywriting, photography, and branding. 

Related: How to start a freelance writing business successfully

What is an employee?

Employees work for a single company on a semi-permanent (or fully permanent) basis. You’ll be paid hourly, through commission, a yearly salary, or a combination of the three. 

Usually, employees work in-office. But this isn’t necessarily always the case, particularly with remote work rising in popularity over the last few years! Sometimes, employees can even negotiate work-from-home time in their employment contracts. 

Speaking of contracts, you’ll have to sign one with your employer, the company you work for. This contract will cover things like your hours, salary, job description, and performance expectations. 

You won’t be responsible for your taxes as an employee. Instead, the company you work for will withhold both income taxes and things like social security and Medicare taxes. These will be automatically deducted from your pay. 

As an employee, you’re protected financially by the company. If something happens to you at work, you’ll receive workers’ compensation; similarly, you’ll be able to claim unemployment benefits if you become unemployed. Just keep in mind that these things are not free—they are also automatically deducted from your paycheck like taxes. 

Some employees are also given comprehensive benefits packages in addition to salary compensation. These packages include a variety of things, like insurance. 

Freelance vs. employee: which is better?

Now that you the definition differences between freelance vs. employee, how do you decide which one is best for you? Here are some of the pros and cons of each role. 

A full-time job comes with benefits

With freelancing, you gain flexibility and control over your time. 

But with a full-time job, you receive those benefits we talked about earlier, like health insurance, paid vacation time, retirement plans, and sick days. As a freelancer, you’ll be on your own for all of those areas. This is something to consider in weighing out the pros and cons of freelance vs. employee!

As a freelancer, you’re completely in charge of your own taxes

As a freelancer, you’ll be completely responsible for all of your own taxes. You’ll also have to pay the self-employment tax. 

If you plan to save in advance for major purchases or long-term goals like retirement, you’ll likely need to invest in a financial planner to help you navigate the process. It will be completely up to you to handle your business and personal finances appropriately. 

Freelancing is more flexible, but may have less stability

One of the reasons freelancing is so appealing is flexibility. Unlike an office job, where you have to do the same thing on a set schedule every single day, freelancing is totally up to you. As your own boss, you set your hours, work-week, and only work on client projects that you choose. 

But that means you need to spend time finding those clients and projects. When you first get started as a freelancer, it can be hard to find high-paying client work. As you gain more experience, you’ll be able to charge way more and even say no to opportunities that don’t fit well with your schedule. 

Sometimes, freelancing can be a bit unstable because you’re working with clients that can stop working with you when they choose. Employment comes with a contract, and while you’ll of course need a client contract for freelancing, you don’t work for your clients. 

Losing a big client is really hard. It’s important to consider whether you need the stability of knowing you’ll be paid a specific amount every single month. 

You’ll get paid in totally different ways

With full-time employment, you know with certainty that you’re going to receive a paycheck at regular intervals. This financial security feels good and helps you achieve your goals financially. 

But with freelancing, you’ll get paid based on the client work you’re doing. There’s risk involved, but there can also be an incredible reward—there’s no limit to the amount you can earn. You’ll set your own rates and can develop unique quote proposals for new projects or specific client goals. 

An employee role offers much more socialization

Freelancing is amazing, but it can be a little lonely. A typical office has lots of social interaction with colleagues. But as a freelancer, your laptop will be your main co-worker! 

However, with remote work on the rise, many cities have co-working spaces where freelancers can come together in person. You can also join online communities for freelancers to make friends and find support. 

If you’re an introvert, freelancing will be perfect for you. But as an extrovert, you’ll need to prioritize looking for social interaction in your freelance career. It’s possible, but it will take more effort than an in-office employee role would. 

How do you know which role is best for you? 

As a young, new creative, it’s the perfect time to take a calculated risk. Freelancing can yield amazing rewards and even result in a business that will last you a lifetime. 

But freelancing when you’re young can also help you land employment opportunities later on. When you first move into the adult world, it’s hard to get hired without real experience in your niche. Freelancing lets you develop a portfolio, learn hands-on skills, and generate results, even when you’re young. 

And as a young adult, you’re likely on your own, which means you don’t have to necessarily think about insurance or steady pay right now. You can take steps toward your goals while living the type of creative, fun life you want!

If you’re enticed by the idea of working for yourself and making your own money while being in control, freelancing could be perfect for you. And if you’re creative, there are SO MANY opportunities for freelancers to generate lots of revenue and work on unique projects. 


Trying to decide between freelance vs. employee might seem overwhelming. But there is no wrong choice here! Either way, you’ll be able to make an income while doing what you love. 

Hopefully, these insights will help you decide which is right for you. Make sure to sign up for our newsletter for more freelancing tips and creative entrepreneurship insights! 

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