As a freelance contractor, you have certain rights that are different than if you were someone’s employee. On the other hand, there are certain things you will not have. Most saliently, you will not have taxes withheld from your pay and you will be responsible for paying them yourself.
Freelancing is an appealing option for people in a wide range of circumstances in a wide range of industries. If you have small children or prefer to work from home, freelancing can be a great way to make ends meet and stay active in your profession.
Freelancing is also ideal for entrepreneurs who want to be their own boss. Some services are especially suited to freelancing because companies may not have a constant need for them, such as preparing tax returns or graphic design.
If you are a freelance contractor, it is important to know your legal rights and obligations so that you and the people you work for do not get in trouble with the government. Here are 8 facts about freelancing that will keep you on track.
1. You Have the Right to Determine How and When You Do Your Job
A freelance contractor is a self-employed person. They work on a contractual basis with one or several customers.
The contract between the customer and the contractor will determine the details of the tasks involved, compensation, and duration of the project.
The difference between a freelance or independent contractor and an employee is the amount of control maintained by the employer. If an employer tells you to be at work at a certain time, when to stop, and how to do your job, you are probably an employee.
A contractor, on the other hand, can decide how and when to complete their project. For example, if you are designing a brochure for a company, you can do it from home, or at night, or on weekends- so long as you complete it by the pre-decided deadline and within the parameters set by the contract.
2. You Are Not Obligated To Agree to All Projects
One of the best things about being a freelancer is that you can take a break whenever you want. If you can afford it, you can decide to take the summer off!
An employee has to do what her employer tells her to do. A freelancer can choose to accept or decline a project depending upon their schedule, need and circumstances.
3. You Can Negotiate Your Own Pricing
If you manage social media for a company or several companies, you can set your price as you see fit. You can give your friend a break on your fee while charging a large company a higher one. You can charge hourly or by the month.
Companies do not have to pay for health benefits and social security taxes for their freelancers. This saves them a lot of money. That means you can charge them more than what they would pay a salaried employee.
Employers often pay freelancers more than a full-time employee would get in a weekly paycheck. They are paying for expertise and efficiency, not long term loyalty.
4. You Have to Pay Your Own Taxes
The reason it is important to make sure your work is correctly categorized as a freelancer is that mistakes can be costly. If you think you are an employee, you may not have been paying your FICA because you thought your employer as doing so. You could be delinquent on your taxes.
Employers can get in lots of trouble if they mistakenly categorize employees as independent contractors. If they have not been withholding correctly, they may be liable to the government and to you.
5. You Have to Finish What You Were Contracted to Do
Employment is usually “at will,” meaning your boss can fire you whenever he wants. It also means that you can quit your job whenever you want.
However, if you are a freelance contractor and you walk off the job, you still are obliged to finish the project you were contracted to do. If you do not, you may be liable for damages to your boss for failure to deliver under the terms of your agreement.
6. You Have the Right to Be Free From Sexual Harassment
Freelancers still maintain certain basic rights in the workplace. Depending on where you live and work, certain state laws may protect you from discrimination and harassment. Usually, federal law will also protect you.
If you have been subjected to unwanted advances, threatening behavior or inappropriate comments in the workplace, speak to an attorney experienced in workplace harassment to understand more about your rights.
7. You Have the Right to a Safe Workplace
Freelance contractors also have the right to a safe workplace. If you are an employee, you may have rights under OSHA if you get hurt on the job. However, even if you are exempt from that federal law, your employer still has to maintain a reasonably safe environment for the people he hires.
For example, if you are an independent trucker, you have an obligation to check your company’s truck before you drive it, but the company itself has an obligation to maintain that truck in good working order. Otherwise, they may be liable for a personal injury suit if you get hurt in the course of business.
8. You Can Work For More Than One Boss
Freelancers can work for as many companies as they like, unlike employees who have to report to one person or entity.
If you are setting up your own business, you want to establish freelance relationships with as many potential customers as you can reasonably service. That way, if one client does not work out, you have plenty of other streams of income.
Freelancers often set up LLCs or other corporate entities to help them manage the work for numerous bosses and also to manage their tax situation.
Want to Be Yor own Boss? Maybe Being a Freelance Contractor is The Choice for You
As a freelance contractor, you can set your own hours and prices, and report to as many or as few customers as you please. You do have to make sure you are paying your own taxes properly and you are staying within the legal definition of contractor as opposed to an employee. However, many people find that the flexibility and autonomy of being a freelance contractor are definitely worth it!
For more tips on starting your own business, check out our blog.