Whether to contract or seek staff employment is one of the top three questions we get in our offices. (The other two are, “How do I find work?” and “How can I find the right candidate?”)
There is, I hate to tell you, no right answer to the “Which is better: freelance or staff?” question.
But there is probably a right answer for you.
Let’s start with the basics.
Staff employment is usually a steadier gig. It generally continues until one or both parties want to end the relationship. Staff jobs often offer formal benefits, including having taxes withheld from paychecks that arrive at regular intervals. They often offer a physical place to do your work. Employers sign papers, employees sign papers; legal contracts are explicit. As long as you’re doing work for the company, you’re getting paid. Even on holidays and vacation.
Freelance jobs are billed and paid per project. Because freelancers are self-employed, they have to pay estimated taxes at regular intervals throughout the year. Even when a client keeps coming back to you for freelance jobs, jobs are almost always for a defined period, to complete a defined scope of work. Payment can be slow, and oftentimes you’re paid months after you do the work. You can protect the relationship with contracts, and will likely get paid. But there are fewer legal ties to hold employers to your fees, timing, and scope. There’s also nothing to hold you to a bad client. You can say no to the next project or the next month of freelance work.
Which pays more? That depends on the same things that drive salary in conventional employment. Fees and salary vary by industry, skill set, experience, client desperation, and market rates. In general, freelancers command a slightly higher rate per hour than salaried employees, but they have to spend unpaid time marketing their services, can’t count on steady work, and are at the mercy of market forces like budget seasons.
Do staff or freelance contractors get better benefits? That depends on what you’re looking for: tangible or intangible benefits. Healthcare exchanges in each state mean you’re able to access similar healthcare to that an employer would provide. You have to pay for healthcare benefits as a freelancer, but employers and the IRS both count such paid benefits as part of an employee’s pay, which is why salaries are generally lower than the equivalent fees for freelancing 40 hours a week for 52 weeks. Most human resources directors calculate the paid benefits (vacation, healthcare, retirement, etc) at 40% of a full time salary.
Like healthcare, retirement accounts are as readily available to self-employed freelancers as to staff employees. Gym, cafeteria, and technology: employers cover these for staff but freelancers usually have to pay their own way.
Other benefits are also quite different for staff and freelancers. Most staff have a physical place to work, while contractors don’t always get to work onsite. Some freelancers get to set their hours and decide when to say no to a project, meeting, or travel. Some can work from home, school, or a cafe, making freelancing a choice for flexibility and different lifestyle.
You’ll notice staff jobs never say “permanent position,” because nothing is permanent. Not even the choice to be staff or freelance. We see a decent percentage of our associates moving into staff positions for a while, then freelancing for a time, then shifting back onto staff when the time or job is right. Some freelance for decades, others only consider freelancing rarely. But there’s nothing saying you have to be one of the other. We also have some associates who are on staff at one company and freelance for others.
In the end, most professional deciding between freelance and staff focus more on lifestyle needs than on the measurable details, because skilled candidates who have found the right career can make the details work regardless of whether they choose staff or freelance. Healthcare, salary, and retirement accounts are details you can work out once you are being paid. The details that are harder to change are how, when, and where you work.
Choices, choices, choices
If stability is important to you, seek staff work.
If flexibility is more important, freelancing could be ideal.
If steady work is your priority, you’ll prefer being an employee.
If you prefer working on projects without being stuck with one boss and one company, the contractor’s life might be for you.
If you have a niche, marketable skill, freelance to use your talents where they’re most needed and valued.
If you want to stick with one company to create and implement multiple projects, go see who’s hiring.
The world between staff and freelance is quite fluid, and it all comes down to what’s right for you. For now.