There is an interesting story (here) about how the economy has fostered a growth in the world of freelancing. This is not specific to photography by any means, but details how companies are apt to rely on freelancers to save the cost associated with employing someone. This is hardly a surprise and one that I think most economists would have predicted. I personally feel it’s a shift that will stay as more and more companies keep payroll at a minimum and depend more on outsourcing when the need arises.
But is freelancing all that bad? Are the costs of running your own business or being a sole proprietor a heavier burden than the freedom gained from freelancing?
I’ve freelanced for twenty years now, so I feel I have a fairly good perspective on the pros and cons. And there are definitely both.
Looking at the positive, I can say without a doubt that with proper care, a freelancer can gain more economic security than an employee. That runs counter to what most people think, particularly those who have worked for others all of their lives. By diversifying your clientele, in my case deriving income from various magazines, non profits, corporations and teaching, the freelancer can weather the downturn from a particular client or clients. By contrast, an employee relies solely on the one company for income and is usually impacted much harder if that one company folds or issues layoffs. Hence, less security for the employee. Another positive, noted in the story referenced above, is the creative freedom to develop your business in the manner the freelancer desires as opposed to the manner which the employer demands. There are many other positives, but those two are at the top of the list, together with things like shorter commutes (in my case, a stroll down my hallway to my office).
Realistically, however, there are cons as well. And the cons are what most new freelancers encounter quickly. No more employee provided health care, paid vacation or sick days, lack of company matching 401k programs or pensions. Another factor seldom considered (until a accountant points it out) is the freelancer is liable for all of the Social Security tax. Whereas an employer typically pays 7.5% and the employee pays 7.5%, as a freelancer you are on the books for the entire 15%. Keep in mind also that a freelancer also has to quickly assume the role of bookkeeper, contract negotiator, expense manager and many other responsibilities previously taken on by the employer. And don’t forget that a freelancer is always on call, so don’t even think about turning that smartphone off!
The transition from employee to freelancer can be tough, especially in this economy where health care costs can devour any profit a freelancer might see. But it can be a rewarding experience as well. Like any transition in life, it will take extreme dedication, a bit of luck and the willingness to work long hours to develop a steady flow of work. Once a freelancer has substantiated his or her business, I think the poll would indicate it’s a superior lifestyle to that of employee.
Open for comments!