People ask me this all the time: “Are you a freelancer?” It may seem pedantic, but the answer is no.
Freelancers are self-employed and not necessarily committed to a particular employer long-term. In some fields, they may be called independent contractors, but in the creative class, self-employed or independent workers are generally called freelancers.
Freelancers typically work from home, although some work in coffee shops, co-working spaces, or even rent their own office space.
As 1099-MISC workers, freelancers do not receive employment benefits such as paid vacations, holidays, sick time, health insurance, or retirement. Their clients do not contribute to their Social Security, Medicare, or FICA. Some freelancers will structure their business as a limited liability company (LLC) rather than work as a sole proprietor, but an LLC is not a corporation—it is a business structure (like a sole proprietorship or partnership) that legally separates itself from its owner(s) but income flows through to a personal return.
I am not self-employed.
I, Duane Smith, am a W-2 employee of a corporation: American Bootstrap Productions, Inc. DBA Duane Smith Design. I receive payroll checks from the Corporation, and the Corporation contributes to my Social Security, Medicare, and FICA. The Corporation pays me for Federal holidays, when I go on vacation, and when I’m sick. The Corporation also provides health insurance, unemployment insurance, workers’ compensation insurance, and provides a 401(k) retirement plan with matching contributions.
The Corporation has capital stock, shareholders, bylaws, and Articles of Incorporation registered with the Commonwealth of Virginia.
The Corporation has a Board of Directors, President, Secretary, and a Treasurer, and by law holds annual meetings and files annual corporate reports.
The Corporation maintains a corporate office in downtown Richmond, Virginia. The Corporation retains a CPA firm, an attorney, a financial advisor, and an insurance agent. The Corporation is responsible for intellectual property and general liability matters, filing and maintaining Federal income tax, State income tax, and State sales taxes.
If you hire me, invoices are issued by the Corporation, and funds received are deposited in the Corporation’s bank account—not my personal account (I wish!).
The Corporation pays wages to its W-2 employees (like me) as well as compensation to 1099-MISC independent contractors.
I earn a fixed salary and, in a good year, may receive a bonus. Every few years, if I’m lucky, I get a raise.
So yes, I am an independent worker. And yes, I am a member of the creative class. And yes, most independent workers in the creative class are freelancers—whether 1099 or LLC.
But I am not a freelancer.
Hopefully, after reading this, you understand why.