The Future of Freelancing, Part 1 of 3
The word “freelance” brings thoughts of insecurity, unstable income and a slew of other negative terms. Why? Freelance work has been traditionally offered to writers, photographers, and consultants. The stigma surrounding freelancers, remote employees, and outsourcing comes from misinformation and over-publicized companies that conduct mass layoffs. The perceived flaws have deterred millions of people from entering the field of freelancing.
A change is coming though.
Freelance work is a growing career field. The U.S. Depart of Labor concludes that one in three American workers are freelancers. With the total population of the U.S. workforce exceeding 200 million, more than 65 million workers are freelancing. It is no longer just a temporary position or a way to make ends meet. People are joining goLance, and finding other methods to work on a project-to-project basis instead of working a full-time job.
Freelancing is the best of both worlds, and the future is freelancing.
Why Do We Follow the Standard?
The Old Standard: "9 to 5"
Traditional businesses hire employees who work for a specified period of time to complete a predetermined amount of work. Productivity is tracked through the impact and progress an employee provides. For the employee, life has become a routine that most dread.
- Set an alarm.
- Wake up and get ready.
- Commute to work.
- Clock in. Work. Clock out.
- Commute home.
This has been the accepted standard for years, dating back to the 1950s. Working a traditional "9 to 5" suddenly becomes a 7:30 AM to 6:30 PM once getting ready, staying late, and commuting is added to the workday. The problem is that an employee is only paid for 8 hours in a day, but dedicates 11 hours towards working. The result is a workday that begins with only a 73% productivity rate at maximum.
What would happen if the standard could change? What if there was a way to increase the productivity of a worker by allowing more freedom, while saving time and business expenses? Does this sound too good to be true?
The New Standard: Freelance
The Benefits Freelancers Enjoy
Freelance work involves living a very different lifestyle from that of being an employee. Some of the benefits include:
• No obligations to wake up on a schedule.
• No commuting, which saves time and money i.e. traffic jams, parking passes, tolls, fuel costs, vehicle repairs, car insurance rates.
• No maintenance or expenses for work clothes, uniforms, or having to dry clean business attire.
• The ability to choose what projects to work on and when.
• There is no drama or negative aspects of office culture. Remote culture exists and may create conflict, but the lack of physical interaction prevents physical altercations, marital infidelity, and other emotionally distressing disruptions in the traditional workplace.
• Permission is not required to run errands, or to act on family emergencies. This limits stress and anxiety.
• Holidays are at the location of your choice. There are no restrictions.
• Pay is relevant to your skills, not set by a boss, employer, or corporate policy.
• It is possible to work more than one contract, maximizing your time management and productivity.
The Benefits Employers Enjoy
Freelancing isn't a one-way street. Employers and businesses have many benefits to enjoy if freelanced talent is used. A major reduction in expenses and some of the benefits include:
- Not needing a building or office space, saving depreciation costs, lease expenses, or land purchases.
- Not having utility bills including; electricity, water, sewage, phone service, heating etc.
- No longer needing insurance for the building, equipment, and employees is no longer required.
- There are no maintenance or housekeeping expenses.
- Since employees don’t work together, there cannot be physical conflicts in the workplace, reducing liability and lawsuits.
- Employment costs are greatly reduced. Payroll taxes, retirements, matching the 401K, holiday/vacation pay, and paid time off no longer exist.
- Employees cannot call in sick leaving the business shorthanded.
- Office supplies and necessities are no longer an expense.
- Freelanced talent provides faster results with a higher level of efficiency.
Concerns About Freelancing
Those accustomed to the old standard reject the idea of becoming a freelancer because of the pay rate, project availability, the loss of benefits, and the requirement to pay self-employed income taxes. Most consider it a journey into the unknown.
Freelancers are paid based on their experience, skills, and talents. Pay rates can vary amongst contracts, but the freelancer controls the pay rate. The freelancer also strives to include the value that they can add in their proposals. Since freelancers don’t incur the additional expenses of an employee, businesses can afford to pay higher rates.
Freelancers have the ultimate in time freedom, and on average work on one to three contracts simultaneously. Earnings from freelancing should be set-aside for durations when work is not available. Personal financial management is a requirement for success in freelancing, just the same as standard employment.
The benefits from a job such as sick days, holidays, and vacations are all immediately offset by time management. If a freelancer doesn’t want to work on Christmas, they can extend their work hours on the days preceding the holiday. Remember, “9 to 5” is an 11-hour day with a maximum productivity rate of 73%.
Self-employment tax is frowned upon, because a lot of people have never paid it. These people also work jobs for companies. When you list the benefits of freelancing and the reduction in expenses related to having a job, the savings are beneficial. Consider the cost of self-employment tax, it is a small price to pay in order to avoid everything you dislike about a job, and to have the ultimate freedom. This freedom allows you to increase your income, which a job typically does not.
To be continued in part 2 of 3.
*goLance does not provide tax advice, and you should consult your local tax professional for help in determining any taxes which you may owe at the local, state, and federal levels.