By Xenios Thrasyvoulou of PeoplePerHour

Oh, those existential questions – who am I? What am I? Why am I here? If you’re one of the huge number of people not working on a complete PAYE basis, you probably find yourself pondering those questions more often than most. For many in the world of business, the terms ‘freelancer’ and ‘contractor’ are practically interchangeable, but there are differences between the two states, many of them occupation-related.

Existentialism is all very well when accompanied by a pint and a bowl of bar room peanuts, but there’s no time for navel-gazing when there’s money to be made, so let’s make things clear and help to resolve at least one of those important questions.

Contractors Vs Freelancers: The Face-Off

So, what are the real differences between freelancers and contractors?

  • As the name suggests, ‘contractors’ typically work on a contractual basis, meaning that they are given a set amount of money to complete a set amount of work in a set amount of time. The contract may be extended if the relationship prospers, but if the work is no longer required, the contractor will still be paid.
Freelancers, by contrast, are usually contract-free. Commonly hired on an ad hoc basis, they can be taken on for long or short term jobs, but while they might be bound by professional etiquette, they do not have the security of a contract.
  • Serial monogamy tends to be the contractor’s way of life; more often than not, they will focus on one project at a time; getting one job done before moving on.
More promiscuous in spirit (from a purely business point of view!), the freelancer will frequently conduct many liaisons at once; flitting between jobs; making each client feel special; but knowing in their heart that this one is not ‘The One’.
  • Due to the working relationship, and the type of work required, contractors frequently work on their employer’s premises.
Freelancers usually work from home… And according to a recent survey conducted by freelance marketplace PeoplePerHour, they’re often wearing pyjamas while doing so!
  • As previously mentioned, occupation can also dictate which category an independent worker fits into. Contractors are commonly found in the IT industry, and a variety of technical jobs.
Freelancers are often in the creative fields, most commonly the media – a freelancer writer, for example, would never describe themselves as a contractor.
  • The business structures employed by the two groups also vary. Contractors will often register themselves as ‘sole traders’, and that can bring a number of financial obligations, including higher tax liabilities, to the employer.
Freelancers are generally registered as self-employed. Although they still need to file an annual return, the process is simpler, and puts no responsibility into the hands of those who give them work.
  • Finally, there’s the psychology. Contractors will often feel more secure in their work than the freelancer, partly because what they do is ‘serious’ stuff, and partly because each job they are employed to do will last for a lengthier period.
The freelancer is often insecure. They enjoy the freedom, variety and flexibility that their work brings, but they will usually be hoarding for a drought; that difficult month when the work dries up.

Strangely, the word ‘freelancer’ has been misappropriated in recent years, with many businesses employing it as a generic catch-all for everyone outside of the PAYE system. Perhaps the change has been instigated by the associated ease of the word. Employing a freelance professional to complete a job has never been simpler than it is now, with marketplaces bringing together all of the self-employed experts any entrepreneur could need. Whatever the case, the time of the freelancer seems to be upon us.