Traditional vs. Freelance Employment: Pros and ConsWritten by InvoiceBerry Team on March 07, 2023
Over the last decade, and especially with recent events, the way we work is experiencing seismic shifts.
Even though having a secure and stable 9-to-5 job with benefits has always been a staple, today, people are more mindful of their personal lives and well-being, making headway to freelance work.
In fact, according to Statista, there will be 70.4 million freelancers in the USA in 2022, and by 2027 it is estimated that 50.9% of the US workforce will be freelancing.
While traditional employment is more secure and offers various perks, freelance work opens many opportunities for growth and development, allowing you to gain new diverse skill sets.
With that said, you might wonder whether you should opt for a conventional job or make a leap and try your hand at managing a freelance position.
Therefore, to help you make the right decision, in this article, we will explain what both types of employment entail and provide a list of the strengths and shortcomings of each one.
Traditional Work Explained
In traditional employment, people work full-time in one company and carry out specific tasks.
Generally, if you have a traditional job, your working hours are predisposed, usually having to work eight hours per day. Then again, a conventional job provides stable pay and additional benefits such as PTO and health insurance.
In most cases, employees can advance their careers within the company by learning and acquiring additional skills. However, sometimes companies do not offer growth opportunities, so you get stuck doing the same tasks in the organization.
What is Freelancing?
Freelancing is a type of self-employment when the worker is not employed by a company but works on a contract.
Hence, as a freelancer, you are responsible for paying your taxes, health insurance, and retirement contributions, along with covering sick days and holidays.
Yet, at the same time, you are your own boss – meaning that you make up your working hours and arrangements.
Depending on the agreement, freelancers get paid per project, task, or hour. But if the scope of the work allows, you can take on multiple projects with different clients simultaneously.
Traditional vs. Freelance Employment: Pros and Cons
While both traditional and freelance work has perks, they also have predicaments. To make the right and sound decision, consider the following pros and cons of both kinds of employment.
The Pros of Freelancing
Choose Your Clients And Projects
As a freelancer, you can choose who you want to work with and on what kinds of projects. This allows you to select jobs in various industries working on different projects, increasing the diversity of your skills.
Hence, freelancing gives freedom to do meaningful work and decline projects outside the scope of interest.
As a result, freelancers are more satisfied with their work and feel prouder about what they have achieved.
Be Your Own Boss
Being a freelancer means having greater autonomy in making decisions or changes since they only affect you. And the only person you need to answer is yourself.
That means you get to experiment with different strategies until you find the right one that attracts more clients and makes the most money.
Apart from that, it allows you to create the best work-life balance that suits your needs and lifestyle.
Bring Flexibility to a New Level
Firstly, you make up your schedule. Even though sometimes you will have to be available for your clients at specific times, you design your working hours as you like.
Moreover, when freelancing, you can control how much you want to work, and you decide when you want to take days off. If you feel unwell, you can take a day off on the spot. And you can plan your holiday according to your wishes.
Lastly, freelancing allows you to work from anywhere in the world. You can design your office and work from the comfort of your home. Or you can become a digital nomad and take your work with you worldwide with your laptop and virtual phone number.
Increase Your Income
The potential to increase your income as a freelancer is virtually unlimited. In fact, Upwork’s Freelance Forward report found that 44% of freelance workers say they make more than they would in a traditional job.
Apart from setting up your prices, you can work for different clients, which means you can have multiple sources of income.
The Cons of Freelancing
Deal With Taxes
Once you become a freelancer, you are responsible for keeping track of your taxes.
Basically, you must calculate how much of your income is taxable and keep that money aside to pay your taxes when the time comes. And you must familiarize yourself very well with regulations and laws when setting your rates, so you don’t work at a loss.
However, one bright side is that you are eligible for specific deductions. For example, if you have business expenses, such as a new laptop or software subscriptions, you can deduct them from your taxable income.
Lack Of Employee Benefits
As a freelancer, you’ll rarely receive benefits from companies. Since freelancers are self-employed, they have to secure health insurance, pension plans, 401(k), and other benefits.
But the good news is that affordable options are available, and you ultimately control the benefits you will access.
Bear All Responsibility
Being a one-person business means that every success and failure is entirely your responsibility. While it is exciting to have the independence to make choices and answer only to yourself, sometimes it can become overwhelming.
On top of working and making business decisions, you also need to learn how to do taxes and take care of administrative work.
If you feel the additional responsibilities are taking up too much of your time and are challenging, you can always take advantage of tools and services. For instance, InvoiceBerry can be helpful in creating and sending invoices to your clients.
Cope With Irregular Work
Finding work on your own can be challenging, and sometimes you might not even find enough to cover your monthly expenses. According to FlexJob’s survey, the biggest challenge for freelancers is finding clients (65%).
Building a client base takes time and dedication, but even the most loyal clients might not renew their contracts at some point. And even if you can get as many clients as you need to meet your costs, sometimes you might have to deal with clients who pay late.
However, most freelancers’ experiences show that in time, work becomes steadier, and you’ll rarely have to cope with inconsistent cash flow.
The Pros of Traditional Work
Enjoy Greater Stability
Most full-time positions have fixed salaries that are either paid weekly, biweekly, or monthly. That provides a steady income allowing you to plan your budget according to your expenses.
In addition to the salary, employers must also pay taxes, retirement contributions, and any agreed-upon bonuses.
This financial security and stability are one of the best features of traditional employment.
Access To Employee Benefits
While benefits are frequently at the employer’s discretion, working in a traditional role, you are eligible for mandatory options such as PTO, social security, health insurance, and pension plans.
Access to benefits also provides additional security in unexpected cases, such as taking time off due to illness or injury.
Boost Your Social Wellbeing
Working from home can be quite isolating, whereas when you work in an office, you can interact with people daily and boost your social well-being.
Developing meaningful relationships with coworkers makes employees feel connected, engaged, and supported, making them feel a sense of belonging in the company.
Take Advantage Of Office Space And Perks
In addition to having an office, a conventional job allows workers to enjoy other amenities, such as complimentary snacks and drinks.
Some companies also provide at-work facilities and spaces for various purposes, like lounge areas, on-site fitness centers, or game rooms where you can relax, exercise, or socialize with your colleagues.
The Cons of Traditional Work
Difficulty Achieving Work-life Balance
Full-time jobs take up two-thirds of our lives. For that reason, sometimes it might be challenging to be productive and effective at work and be present for family and close ones, too.
In turn, this can lead you to overwork or, at worst, burnout.
However, even though achieving an excellent work-life balance might be demanding, with proper planning and management, it is possible.
Experience More Work-related Stress
Knowing that you have a predetermined eight-hour slot to finish all your daily tasks can sometimes be a burden. There are instances when you might not feel most productive during that period and, as a result, feel stressed.
The critical thing to remember is that trying to handle multiple tasks at one time will probably lead to even more stress. In such situations, prioritize what needs to be completed first and, if necessary, ask for support from your coworkers.
Boredom is one of the most damaging features of a full-time job, and it affects employees in companies that do not support their growth and don’t offer opportunities to work on different tasks and projects.
Employees like to grow in their positions and advance in their careers. If their organization doesn’t support that, eventually, they become disengaged and fed up with their work.
Therefore, if you work at such a company for a long time doing the same repetitive tasks, chances are you will become bored.
Most critically, it will make you less productive and reflect poorly on your performance reviews. Thus, if you start feeling like you are becoming stagnant, try to take on more challenging projects or develop new skills.
No Versatility On Resume
Being loyal to a company is greatly valued. But in addition to that, employers also highly regard having different experiences on your resume. Having skills in various areas increases your chances of finding and landing a new job.
If your company doesn’t offer growth opportunities, you can enhance your experience by participating in volunteering groups or organizations to use your additional skills.
How to Know Which One is the Right for You?
The answer to the questions lies in what is more important to you: security or flexibility?
Are you more interested in having a steady income and benefits, or would you like to be your own boss and choose the projects you want to work on?
Do a self-analysis of what you want in your career and personal life and decide which path is the best for you.
But remember, both options are a good choice, and it only depends on which one works better for you. And if your circumstances change, you can always move back and forth between freelance and traditional employment.
Marija Petrushevska is a content writer at Shortlister. She enjoys writing SEO content, including articles and guest posts on HR, wellness, and benefits.