One of the big growth areas in terms of the job market in recent years has been the number of people who are now self-employed. From self-employed business owners to freelancers and contractors, there are lots of different terms used to describe people who work for themselves. So which one applies to you and what are the differences?
What is a freelancer?
A freelancer is generally someone who works from home or from their own business premises and work on a variety of projects for different clients at one time. Some of the most popular areas for freelance work including as writers, designers, web developers and photographers but you can also employ freelance tutors, accountants and translators.
‘Freelance’ isn’t a legal term but describes a way of working. From a tax viewpoint, you are classed as self-employed and therefore need to register with HMRC to complete a self-assessment tax return. When it comes to your books, it can be worth working with accountants for freelancers who understand areas such as discounts for working at home.
What is a contractor?
A contractor is someone who works for one client full time for the duration of a project, sometimes in their own workplace or sometimes in the workplace of the company. The IT industry is one of the most common places to find contractors, where they spend six months working on a new IT system for a company, for example, or to spend a set period filling a skills gap for an employer.
Like freelance, contractor isn’t a legal term and they also fall under the heading of self-employed for tax purposes. There are also specialist contractor accountant services available to help manage the different requirements of the role.
Where does solopreneur fit in?
The term solopreneur is a relative newcomer to the work descriptions and is simply someone who has set up their own business – so, essentially, someone who is self-employed. These tend to be small business owners, business consultants, virtual assistants and online developers, to name a few. They work to the entrepreneurial model but don’t have staff to do any of the work, instead doing everything themselves. And they have to register as self-employed just the same as everyone else!
So are you self-employed?
What this means is that if you are a freelancer, contractor or anything else of a similar nature, you are all classed the same for tax and legal purposes. A self-employed person is someone who creates their own services and products, has final say over what happens with them and doesn’t answer to anyone – they are their own boss.
Of course, being your own boss isn’t right for everyone – there’s no-one to rely on for help if things go wrong, you have to do all of the work yourself and there are no sick days if you are ill because there’s no-one else to fill in. But you are in the position of controlling your work life completely and working with the clients that you want to when you grow your business and this has great appeal to many people.