Are you unsure whether to be an employee or pursue a freelance career? I’ve tried both, starting as a freelancer, then transitioning into an employee and back to being a freelancer.
It’s all about who you are as a person and what you want to pursue. I’ll dive into the pros and cons of being a freelancer and an employee. And in the end some tips for how you can decide.
Let’s get into it by starting with some key takeaways.
Key Takeaways Of The Difference Between Freelancers and Employees
- Freelancers have a higher earning potential.
- Employees feel more secure in their job situation,
- Freelancers had headaches finding clients.
- Employees have benefits of health care, retirement funds and more.
- Freelancers have a more flexible schedule.
- Employees can collaborate in teams.
Pros Of Being A Freelancer
I’ve been a freelancer on and off for more than 10 years, and I’ve tried everything working with more than 40 different clients. So here are the pros of freelancing, based on my experience.
- Flexible schedule. As a freelancer, it’s entirely up to you how you schedule your day and week. You decide when you work. This is perfect for night owls, who are most productive during the night. Personally, I’m an early bird, and I enjoy working early in the morning when everything is quiet. Freelancing allows this.
- Unlimited earning growth. As a freelancer, your income is entirely up to you; you’re only limited by the number of hours you work. How much you earn depends on your hourly rate, times the number of hours you work. When you become more experienced, your hourly rate will increase, so your earning potential is unlimited.
- Work from wherever you want. This is one of my favourites. If I want to work from a coffee shop, I can do this without permission. If I want to fly to another country and work for a week, I can also do this. There is no boss to tell me what I can and can’t do. All I need is a computer and a wifi connection, and then I can work.
- Choose the jobs and clients you want to work with. Initially, you might need to take on whatever jobs you can get. But as you progress and get more experienced in your industry, you can start saying no to projects and clients you don’t want to work with. This allows you to work with only the projects you find fun, and this is a game-changer, as we spend so much time working.
- You’re your own boss. This is also a beautiful thing, as long as you have discipline. You decide what you work on, where you work on it, and when you do so. You schedule your own day, and everything is entirely up to you.
- You decide on your own holiday. This is a great thing as well. You don’t have to take your holiday in a specific timeframe where everyone else is. You can do it in the low seasons when everything is cheap. This is something I’m really enjoying.
- You can grow to become an expert in your industry. As a freelancer, you can share everything about you on social media, LinkedIn and so forth and by doing this, you’re growing to become an expert in your industry. This will help you acquire clients as well.
- Diversify your income. As a freelancer, you have multiple clients, so if one client quits, there is no panic as you have maybe 3-4 others. Being a full-time employee, you only have income from one place.
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Cons Of Being A Freelancer
Being a freelancer is not all golden days, and there is a lot of worrying about where the next paycheck should come from. And if a client quits from one day to another, you need to find new clients quickly. So here are the cons of being a freelancer.
- In the beginning, it is super slow. Starting freelancing is tough if you don’t have some clients lined up ready to work with you. It just takes a lot of work because you need to convince clients to hire you, even though you have no track record. I was lucky and created traction already after a month. It’s all about getting the first client, and then it starts to roll from there.
- You need to handle your own taxes and accounting. This is tedious, but in the beginning, and maybe further, when you don’t have a budget, you’ll have to try and figure out how to handle your VAT and taxes by yourself. If you spend a little time doing it, it’s not that difficult, but it’s super time-consuming, speaking of experience. You want to hire an accountant to help you with this as soon as you can.
- You don’t have paid vacation. Being a full-time employee, you can enjoy paid vacation. Being a freelancer, it’s all up to you. If you don’t work, you don’t make a living. So when you’re on vacation, ensure to have some savings to help you in that period, as it’s you paying.
- There is no work guaranteed. Opposite being a full-time employee, you have to create your own work and find your own clients. This is an extra aspect of being a freelancer. Some find it interesting, and others fear it. It’s all about preference.
- You need to handle everything. As mentioned, you need to handle your own taxes, but you also need to handle clients not paying on time and to spend time following up. Once you start freelancing, there are a lot of small tasks you need to take care of, like this.
Pros Of Being An Employee
Being a full-time employee is the dream for many, and I understand why. I’ve also tried it in multiple companies, and it has its pros. Here they are.
- Fixed salary and stability. This is one of the greatest assets of being hired full-time. You don’t have to think about where your next paycheck comes from. It’s all taken care of, and you must focus on performing the best job possible.
- Structured work day. As a full-time employee, your boss or closest colleague has most likely planned the day for you, or you know exactly what to work on because you’re focused on a project. Overall then, working as a full-time employee is super structured.
- Work with a team. Another benefit is that you work in a team, which brings so much value. If you’re social, you most likely solve projects best in teams. Doing this allows you to delegate and work together against the goal.
- Retirement options. This doesn’t apply to all full-time jobs, but the majority offer the ability to deposit money in your retirement funds of your salary pre-taxes. This is a great benefit as you pay less taxes while growing your retirement funds.
- Paid vacation. Lastly, having paid vacation is just incredible. In Denmark, we have 5 weeks of paid vacation automatically. All we have to do is meet up to work and perform our best.
- Maternity leave. Again it depends on your country, but often you have paid maternity leave. You get your salary and can focus on raising your new wonderful baby.
Cons Of Being An Employee
As with everything, being a full-time employee brings cons as well, significantly if you’re not cut out for being a full-time employee.
- Work-life balance can be tricky. When you’re a full-time employee, you might have a boss who texts or emails you late. Or you have strict deadlines you need to focus on, and it requires you to work over hours. Not all companies pay extra for this.
- Your resume only shows full-time jobs. If you only work full-time jobs, your resume will lack diversity. If you have your own company or a freelance position on your resume, it shows companies you’ve gone beyond being a full-time employee and know what it takes to make a living by yourself.
- You can become tired of doing the same job. I personally get tired if I have to do the same thing over and over again. The case might be different for you. As a full-time employee, you often have one job to focus on, and that’s all you need to do. You’ll get exceptional at the job but might also experience burnout.
- Your boss dictates where to work, your hours, and what to work on. This is my least favourite con. I really want to be able to decide my own work-life, but being a full-time employee, your boss will dictate most of your work. Luckily it’s becoming looser, but there is a long way to reach the same freedom freelancers experience.
Conclusion
Now we’ve been through the pros and cons of being freelancers and employees, so how do you decide what to go with?
You’ll need to figure out what motivates you. Is it to have a structured day, with security in your job? Or do you like the flexibility of being a freelancer but with risks?
Set the two lists up against each other, and then checkmark what is important for you. Maybe you don’t feel you have a marketable skill to earn through freelancing, so you should start being a full-time employee.
Or if you like working in teams and don’t care much about the earning potential, then again, being a full-time employee is the thing for you.
Only you can answer the question, review the pros and cons, and find the right solution for your situation.