Contractor vs Freelancer: What’s The Difference?

A contractor is a self-employed individual who provides services to clients. They generally sign a contract for a specific project or set of projects. A freelancer, on the other hand, is also a self-employed individual who offers services to clients but often works on a project-by-project basis without a long-term commitment. Freelancers may also have multiple clients at the same time.

Contractor vs Freelancer
  • What is a freelancer?

A freelancer is a person who works for themselves and does projects for clients without making a long-term commitment. They work independently and often have multiple clients at the same time. They are paid per project or on an hourly basis. Examples of freelancers include writers, graphic designers, programmers, and consultants.

  • What is an independent contractor? 

An independent contractor is a person who works for themselves and does work for clients but is not an employee. When it comes to freelancing, an independent contractor is usually hired for short-term projects and paid per project or by the hour. They are responsible for their own taxes, insurance, and benefits.

Work flexibility: Independent contractors set their own schedules and work from wherever they choose.

Control over work: They have complete control over how they complete the work for their clients.

Responsibility for supplies and equipment: Independent contractors usually provide their own supplies and equipment.

Determination of payment: They determine their own rates and payment terms with their clients.

The 5 Key Differences Between Freelancers and Contractors

Contractor vs Freelancer
  • The Hiring Process :

How you hire an external worker can tell you whether they are a contractor or a freelancer. For example, if your company wants to outsource a certain job, you may reach out to an external vendor or agency. This vendor then assigns a number of workers to perform the task at hand.

These workers are referred to as contractors. At the end of the month, you pay the vendor, who in turn pays each individual contractor. Do note that in the case of an independent contractor, however, the hiring process may be more direct. Since they own their own limited company, you would work directly with the person and not with an agency.

Freelancers, on the other hand, always work on their own. As an employer, you reach out to them directly; you do not have to go through an agency or a vendor to hire a freelancer. Payments are made directly, too. Once the task is completed, you pay the freelancer the full amount that was agreed upon.

  • The way they work

Contractors work more independently for employers than they do for employees. Depending on the job they are hired for, contractors may have to work at your business or use its facilities. Because the job may require them to work specific set hours, they may not be able to choose their own schedules.

Take, for instance, contractors who are hired to provide customer support services. These professionals will need to be available when the company’s support hotlines are open. In the same way, if you hire a freelancer to take care of system backups and maintenance, they may need to work when the rest of the team is offline. These timing requirements are stipulated in their contracts.

  • The kind of work they do

Even so, contractors usually do work that is different from what freelancers do. Rent is a recurring expense for many businesses. businesses. Many businesses outsource recurring tasks to contractors who provide security services, perform repairs, or even manage teams. Companies like Google have a massively contracted workforce for crucial tasks that need to be performed at regular intervals—c coding, screening content, conducting demos, and handling calls. It is also very common for companies to hire skilled independent contractors for IT services like performing software updates, system maintenance, and data protection.

Given that freelancers’ timings and other work specifications cannot be dictated by employers, they are usually hired for non-recurring jobs. Freelancers are extremely common in the marketing, media, and creative industries. Designers, content writers, marketing managers, UX/UI designers, and strategists often work on a freelance basis, offering their skills to a number of clients.

  • Setting Rates

Freelancers are expected to set their own rates. They can decide whether they prefer being charged by the hour, by the day, or by the project. They also have to negotiate prices with their clients, ask for payments, and keep track of their bills. 

The situation is quite different for contractors, who are generally hired through an agency. It is the agency’s job to come up with a rate and communicate it with the client. However, some contractors are independent and are, just like freelancers, responsible for setting their own rates and handling their invoicing independently.

Whether you employ independent contractors or freelancers, what matters at the end of the day is that you are able to get the best out of your external workforce. If you can tell the difference between these two types of outside workers, you can set the right goals and give them the right information. 

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