Freelance meaning: Understanding Freelancing and Self-Employment

Taking the leap to start freelancing or self-employment can sometimes be nerve-wracking. And this can be taken to the next level if you don’t quite understand what you need to know about freelancing. To help you in this situation, we’ve written this article. 

In this article, we’ve explained the meaning of freelance, types of freelance work, how freelancers make money, the pros and cons, and sometimes legal considerations you need to think about.

The Meaning of Freelance

To freelance means that you’re doing particular pieces of work for different organisations, rather than working all the time for a single organisation. This approach enables you to pick and choose assignments that align with your skills and interests, often being able to negotiate project terms and schedules.

However, it can also place more responsibility on you as a freelancer to manage your finances, client relationships, and even your workload—which includes scaling your freelance business.

Type of Freelance Work

Freelance work can encompass a broad range of opportunities for you if you seek an alternative to traditional employment, such as being a digital nomad. In English-speaking markets, freelancers typically specialise in roles such as writing, editing, design, or translation. 

This form of self-employment allows you, as a freelancer, to operate independently, undertaking projects for many clients instead of one organisation. Among these roles, you would also find the following roles:

From creative fields—like graphic design or content creation—to professional services such as accounting or consultancy, freelancing provides you with the freedom to tailor your schedule and even how much work you decide to take on. Also, quick tip: this is something that you should always put on your freelancer CV or your portfolio.

How do freelancers make money?

As a freelancer, you can typically earn money by charging clients in many ways. This would depend on the nature of the work and the industry standards. To ensure that you’re aware of the most common ways, here are four main ways you can make money as a freelancer:

Per Word

If you’re a freelancer who is in the industry of writing or translating, you might be aware of the projects that are being charged per word. This method is straightforward and enables transparency, as both you and the client can calculate the total cost by multiplying the agreed rate by the number of words. 

Per-word pricing is especially popular in content creation, journalism, and copywriting. This is where the scope of work is defined by word count. It is also important to mention that some clients may ask for your price per 1000 words, and that is something that I’ve seen become more popular.

Per Hour / Day

Charging per hour or day is also increasingly more common. This is particularly prominent in consulting, programming, or virtual assistance, where tasks may be open-ended or require ongoing collaboration. To ensure what you can track, freelancers track the time spent on each project and each invoice accordingly. You can also compare your freelancer rates per day to ensure that you’re able to charge compared to your industry.

However, when you’re tracking per hour, you need to ensure careful time tracking and transparent communication so this doesn’t get disputed against you. When you’re charging per day, this is easier as you don’t have to be as meticulous with your tracking as you get paid based on your daily rate. 

Per Project

If you’re working on a bigger project, but not big enough to be a retainer agreement, then you can also agree to be charged per project. This is especially prominent if the work is clearly defined. This would involve agreeing on the total cost for the entire job. 

Some jobs for this type of payment would be designing a logo, building a website, or writing a series of articles. But this is something that is your choice to agree on, as there is some overlap with some methods. When choosing this method, it is a good choice, as there are predictable costs for both yourself as the freelancer and the client.

Retainer Agreement

When you’re working under a retainer agreement, the clients agree to pay you a set fee regularly; this is typically once a month. This is in exchange for your freelance services. Instead of being tied to a word count, having to log your hours, or telling them each time the project is complete—although you will need to give them constant communication—the client is paying you for your availability and readiness for the project.

One of the main benefits of a retainer agreement is that there is a consistent income and that you’re able to streamline your budgeting to understand what your monthly income looks like. 

Pros and Cons of Freelancing & Self-Employment

As freelancing becomes more and more popular, it becomes more obvious about the pros and cons that are offered. Between the flexibility of self-employment, who may grow their business and hire employees, and those who are freelancers who work on a project-to-project basis with flexibility but working mainly alone. 

There are similarities and differences to each way of working, which may be pros or cons for you. Here are some pros and cons of freelancing:

Benefits of being a freelancer

Freelancing and self-employment are able to offer you several notable benefits. Among the most notable for yourself is that you have the freedom to choose the projects and even be able to set your schedule. Don’t want to take on a project? Don’t—it's that easy. This helps you achieve a better work-life balance.

Since you have no fixed employer, you have the autonomy to go in any direction with your brand and your professional path and become a successful freelancer. However, if you’re self-employed, this might be slightly different as you take on bigger projects and start to hire a team. In addition, what might be the biggest benefit for a lot of people, is that you can earn substantially, especially if you’re in a niche.

Drawbacks of being a freelancer

On the other hand, some drawbacks are given by freelancing and self-employment that you have to also take into account. 

One of the biggest things that could affect your income is the uncertainty surrounding when your next projects will occur. The flow of projects can vary a lot from month to month, which makes you think about when you will get your next invoice paid. As a freelancer, you want to get paid and this is important, but less pressure. However, if you become self-employed, work with more clients and start hiring people, this could have more pressure and become more stressful.

Additionally, sometimes, a healthy work-life balance can become difficult, especially if you’re given the temptation to overwork and remain available. These factors can underscore the importance of discipline and planning.

Legal Considerations as a Freelancer

Sometimes, as a freelancer, you need to be able to understand both the legal and financial obligations of the role you’ve put yourself in. So, to ensure that you understand a small part of this, here are some points surrounding legal matters that you should consider:

Legal

Legal considerations play arguably the most important role in safeguarding your freelance work. Before you start your freelance work, you need to understand your business structure. This could be a sole trader or limited company. Be safe, as this could affect taxes and liability. Differently from paying your taxes in a full-time job, you will need to pay them yourself.

You also need to understand contracts between you and your client to help you define project scope, payment terms, and deadlines and minimise disputes with your clients. It is also essential to ensure that you keep proper records of communications, deliverables, and invoices. This is also why it can be an additional benefit to do this via Malt, as it is all in one place.

Freelancing: a new way to work

Freelancing and self-employment offer a flexible alternative to traditional employment, allowing individuals to take control of their careers and income. 

While the benefits, such as autonomy, the potential for higher earnings, and the ability to choose projects, make freelancing an attractive option, it also comes with challenges like income instability, self-discipline, and the need to manage legal and financial responsibilities independently. 

Whether you’re just starting or looking to scale your freelance business, careful planning, adaptability, and strategic decision-making will help you build a sustainable freelance career.