Freelance Part 3: Working as an Independent Contractor

Independent contractor

In the last two posts, Pros and Cons of Hiring Independent Contractors and The Legal Aspects of Independent Contractors, we have looked at the pros and cons and the legal aspects of hiring freelancers. This post will address the issues that face individuals working as independent contractors.

The number of freelancers in the United States is rapidly rising. With the economy still shaky and layoffs still a concern for many, the idea of being an independent contractor is extremely appealing. While there are benefits, there are also drawbacks. It is important to explore all facets of being an independent worker before taking the plunge into self-employment.

The biggest drawback that prevents people from becoming a freelancer is the lack of benefits. When an employee is hired by a company, they normally receive benefits like health insurance, a 401K, and paid vacation days. Independent contractors are not allowed any of those perks. Employees often do not realize how much their employers pay in insurance, retirement and time-off. For many it is impossible to afford private health insurance and they do without.

Instability is another major concern for independent contractors. Working on a project-by-project basis can be extremely stressful. It is helpful to have a network of contacts, as well as an understanding of the importance of self-promoting. In order to maintain a constant workload, freelancers often have to work hard to find clients. The money also comes in much more sporadically, and it can be difficult for someone who does not save and budget. There is also the issue with not getting paid at all.

The nature of the client/independent contractor relationship is inherently different than the employee/employer relationship. There is much less supervision and training, and if there is no work, there is no payment. There is also no recourse for discrimination in the workplace, since an independent contractor is a business, not an employee. Freelancers must also pay their own professional fees and keep up any licensures with no help from an employer.

Having a good attorney and a good accountant are important for any independent contractor. The attorney can assist in creating contracts, as well as provide guidance for intellectual property issues. They can also assist in recouping any outstanding debts owed from clients. They will provide guidance in determining the structure of your business. It is possible that being an LLC, or PLLC, is a good idea. The accountant is vital in helping to understand the taxes and paperwork involved in being an independent contractor. They will help to determine what can and cannot be used as deductions, and hopefully help to avoid an audit.

Most freelancers will admit they work much harder than they ever did as an employee. However, for many the benefits outweigh the risks. Having more control over scheduling and projects, as well as being your own boss, is the perfect solution for many. It is important to do research to determine if it is the right move. Carefully weigh the costs, benefits, and your own motivation. With a good accountant and lawyer helping guide the way, working as a freelancer can be very satisfying and profitable.


    • Beesley, Caron. Starting a Freelance Business-How to Take Care of Legal, Tax and Contractual Paperwork.(July 18, 2012). SBA.GOV. Retrieved March 31, 2013 from
    • Branch, Allan. (January 18, 2012) 6 Tips to Avoid IRS Audits for Freelancers. Freelance Switch. Retrieved on March 31, 2013 from
    • Independent Contractor (Self Employed) or Employee? (January 10, 2013) IRS. Retrieved on March 31, 2013 from

Revolution Law Group is located in Greensboro, NC, and serves individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit or call 336-333-7907.

The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice, and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.