What are the Advantages and Disadvantages of Working As a Freelancer?

Bronwyn Harris

A freelancer is a person who works for himself or herself. Instead of being employed by a specific company, freelancers contract out their talent. Freelancers can be found in all fields — writing, photography, consultants, and many many others. As with any job, freelancing has its advantages and disadvantages and is not right for everyone.

Virtual assistants are usually independent contractors, which means they pay for everything related to their businesses out of their own pockets.
Virtual assistants are usually independent contractors, which means they pay for everything related to their businesses out of their own pockets.

There are many advantages to working as a freelancer. Many people dream of working from home and avoiding their commute. Some freelancers can, in fact, work in their pajamas, telecommuting or working for themselves. Freelancers are often able to set their own hours, making their work lives revolve around their family lives instead of the other way around. People who prefer to work very late or begin very early have the freedom to do so, instead of conforming to office hours.

Telecommuting allows employees to work from a remote location.
Telecommuting allows employees to work from a remote location.

Many freelancers feel that they have more time to work if they aren't required to commute or sit in staff meetings. Freelancers get to be their own bosses, choosing which jobs to take, negotiating contracts, and determining how much pay they will ask for. This can be either freeing or terrifying, depending upon the person and the situation. One freelancer may find that she has enough work to keep her happy and wealthy while another may find the work coming in very slowly.

Freelancers may have a hard time unplugging even when on vacation.
Freelancers may have a hard time unplugging even when on vacation.

Because there is no employer to withhold taxes or retirement funds, a freelancer needs to have the budgeting skills to set aside enough money to pay taxes each year and to be able to retire. Freelancers are in for a nasty surprise if they forget to save for taxes, or underestimate the amount of taxes that will be charged at the end of the year.

Freelancers may have to balance work and family obligations.
Freelancers may have to balance work and family obligations.

Health insurance is another problem for freelancers. Many people get their health insurance from their job. It is easier to get a good policy if you are one of a large group, and employers tend to cover not only their employees but also the employees' spouses and children. Freelancers, however, usually have to find their own health insurance. Preexisting health conditions can work against someone trying to find health insurance, and spouses and children will cost extra. More than one freelancer has been known to go back to working for someone else in order to have steady health insurance.

Some people also have trouble becoming motivated without the accountability of a manager or other employees around. When decided whether or not to freelance, all of these options must be weighed against each other. Whether the advantages or disadvantages of freelancing will be stronger depends upon a person's personality, family situation, skills, field, and money management.

Most freelancers have to purchase their own health insurance.
Most freelancers have to purchase their own health insurance.

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Discussion Comments

anon15707

As a freelancer, do I have to sign a W-9 before receiving a verifiable check for the service I render to a contractor or after I verify that the check is good & the amount of money on the invoice is not tampered with?

knittingpro

It's important - especially your first year - to really actually save that 25% or you will be in BIG BIG trouble come tax time!! Also, as a freelancer, you have to think about saving for retirement because your "company" won't do it for you.

knittingpro

I think it's about 25% although it varies, of course. I've always heard that if you put away a quarter of your earnings, you'll be OK. Although as freelancers, you're supposed to pay quarterly taxes instead of just once at the end of the year.

amandamarie

Would someone be able to tell me how much money I should put away for end of the year taxes if I'm doing freelance work? Is there a percentage? Thank you.

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