If you’re considering becoming self-employed, it’s important to consider whether you will be operating on a contract or freelance basis.
Legally, there’s little to distinguish between contractors and freelancers in terms of tax or how they are registered but the way that each interacts with clients differs and tend to be associated with specific industries. In our latest blog, we outline the key differences between contracting and freelancing.
What does a Contractor do?
When thinking about becoming a contractor, you’ll need to decide what services you offer to clients and what your terms will be. A contractor will provide a service or services to a specific client, for a set period of time. The term “contractor” is based on the contract that is entered into by supplier and client which defines what will be delivered and when by.
Contractors usually work at the client’s premises, essentially as a temporary employee, until the project is completed. The key difference to note is that contractors do not receive any employee benefits and are not enrolled on the company’s payroll. This means that contractors are responsible for their own tax and National Insurance and pension contributions and administration.
Industries that contractors commonly work in include: IT, Education, Health, Finance and Consulting, often filling in for an absent member of staff or providing temporary expertise for a one-off project.
What does a Freelancer do?
If you’re thinking about becoming a freelancer, it’s useful to consider how freelancers work and what you’ll need to know.
Unlike contractors (who usually work for one client at a time), freelancers tend to work on a number of projects with different clients at the same time. There is normally a set deliverable and the freelancer will work on the project or commission at an hourly or daily rate, or a fixed project rate. Projects are usually short term and result in a bespoke design or piece of work.
Freelancers often offer creative skills such as art, design, web design and architecture, adding value to clients across a wide range of industries. Freelancers are responsible for managing their own time and budgets and sometimes work flexible hours which are not aligned with the commissioning client’s operating hours.
When considering becoming a freelancer there are a number of considerations to keep in mind including whether to set up a limited company and how to manage your finances. Contact us for help getting started.