What Is a Freelancer? Definition and How to Start Freelancing

A freelancer is a self-employed individual seeking short-term or part-time work as an independent contractor with one or several companies without expecting full-time employment. Freelance workers exist in almost every industry, especially in creative fields such as design, film, art, photography, acting, and music. The most popular freelance jobs include freelance writer (especially copywriting), computer programmer, web designer, graphic designer, proofreader, and web developer.

The term “freelance” does not mean you work for free; freelancers do get paid, though they may not receive their payments on a regular schedule. Instead, freelancers are “free” because they do not have a long-term commitment to any one organization.

The perks of being a self-employed person include being your own boss, making your own hours, the option of doing remote work from home, and (sometimes) better work-life balance. (Learn how to strategize your work-life balance with journalist and talk show host Elaine Welteroth.)

However, downsides of a freelance career exist, such as a lack of benefits (like company-supplied health insurance and retirement plans), the labor of seeking new clients, the instability of an unreliable income, and (sometimes) lower rates of pay compared to full-time employment.

If you’re a first-time freelancer, entering the freelance marketplace might feel confusing. When you’re ready, follow these steps to begin your journey:

1. 1. Choose your work. Identify your skillsets and the type of work you’d like to do as a freelancer. If applicable to your field, make a business plan and set goals for yourself.
2. 2. Determine your freelance rates. If you’re unsure what to charge for your services, consider reaching out to others in your field and asking for advice. Decide whether you want to set an hourly, daily, or per-job rate.
3. 3. Join employment websites. Create business profiles for your services on freelancing websites and employment sites that aren’t explicitly geared toward freelancing but can connect you with potential employers, as many companies hire employees and independent contractors.
4. 4. Advertise your services. Consider building a professional website, including what you offer and examples of your work. Create business profiles on social media and use the marketing services provided by each platform.
5. 5. Consider working for free at first. If you’re just starting your career, offer your services to potential clients at a low cost (or for free) to expand your portfolio and get the ball rolling. Approach businesses that frequently hire freelancers, such as startups.
6. 6. Ask for referrals. Ask family and friends for referrals, and then ask your clients for referrals as you get more work. Go to the places your target market gathers and introduce yourself. Join any associations within your industry and use them to network with others in your field. A mentor can be a huge help; learn how to find a mentor with Elaine.
7. 7. Plan for health insurance, retirement, and taxes. There are several financial decisions associated with working as an independent contractor that regular employees can mostly ignore. The first is the lack of employer benefits. Without an employee benefits program, freelancers must choose their own health insurance plans and set up their own retirement accounts. The second is taxes. Most employers deduct taxes from their employees’ paychecks but pay independent contractors the total amount they invoice for. It’s then up to you, the freelancer, to make quarterly tax payments, including self-employment tax.

As you start freelancing more regularly, keep these essential tips in mind:

1. 1. Find the right health insurance. Since you won’t benefit from a full-time employer contributing to your health insurance, you’ll have to pay for your own. You can find government-subsidized insurance at a reduced premium through marketplaces. Knowing the cost of health insurance will help you budget for expenses and determine your rates.
2. 2. Keep track of your finances. As a freelance business owner, you’re solely responsible for your finances, including negotiating rates and keeping track of received and expected payments. Attend to your bookkeeping, invoicing, and other administrative duties with a critical eye to avoid tax trouble or missed payments. As your business grows, you may need the help of a trusted accountant, agent, or bookkeeper.
3. 3. Pay your taxes. As an independent contractor, your clients will send a 1099 form at the end of the year for your tax reporting. The United States Internal Revenue Service (IRS) requires you to report your earnings and pay taxes the same as you would for a full-time job; you’ll also be responsible for self-employment tax.
4. 4. Plan for retirement. Though you may enjoy your freelance work, you’ll eventually want to retire. Since you won’t have access to employer-sponsored plans, consider starting your retirement fund through an IRA, SEP IRA, or an individual 401(k).
5. 5. Prepare for instability. Freelancing lacks guarantees. One year you might struggle to keep up with work, and the next will be slim pickings. Good money management and saving for contingencies will help you weather the rough patches in your freelancing career.

The self-employment field consists of several freelancer types, including:

1. 1. Diversified workers: Being a diversified worker means earning money from multiple sources. Perhaps you rely on some combination of temporary, freelance, and dependable contract work.
2. 2. Independent contractors: Often used interchangeably with the term “freelancer,” “independent contractor” refers to a person who acts as their own small business and the IRS treats them as such. The nature of work independent contractors handle (such as handymen, gardeners, or artists) naturally leads to a wide variety of separate clients.
3. 3. Moonlighters: Moonlighting means you have a full-time day job but do freelance work outside of working hours to earn additional income.
4. 4. Small business owners: If you’re a small business owner, you may work from a brick-and-mortar location, and you might even have employees or other freelancers that work for you. Technically, you are your own boss and work for yourself, hence its inclusion under freelancer types. It is not uncommon for independent contractors to transition to small business owners if their client base grows beyond their capacity. Learn more about starting a small business.
5. 5. Temporary employees: As a temporary employee, you work on a nonpermanent basis for a company, often through a temporary agency. Temp employees fill in when permanent workers aren’t available and work full-time or part-time hours, anywhere from a single day to much longer. Unlike independent contractors, temporary employees sometimes receive employee benefits.

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