In the UK, ‘freelance’ and ‘self-employed’ are terms commonly used by people who work for themselves. But are they the same thing? Is a freelancer always self-employed? And is someone who is self-employed always a freelancer?
This article clarifies the matter, covering the similarities and differences between freelancers and self-employed people.
The HMRC definition
HMRC describes someone as self-employed “if they run their business for themselves and take responsibility for its success or failure”. However, this statement is also appropriate for a freelancer (a term not formally recognised by HMRC).
Moreover, for HMRC, self-employed is a term solely connected to the sole trader business model. From their perspective, people who choose to operate through limited companies can’t be ‘self-employed for tax purposes’ and are instead viewed as employees.
Nonetheless, it’s a term commonly used by limited company owners and is still worth exploring in more detail, as we aim to do in this article.
Freelancers explained
A freelancer works for themselves by providing a specific service that they specialise in – this can be full-time or as part of a side hustle.
They typically do one-off work, whereby they provide their service to a client, are remunerated, and then leave. Of course, if they do a good job, they may be hired by the same client again. The term often projects an impression of being in demand and therefore conveys trust.
Whilst it isn’t exclusive to the digital marketing sector, many of the jobs associated with freelancing are now within that realm. For example, the following are all synonymous with freelancing:
- Web design
- App design
- Graphic design
- Copywriting
- Translating
- Search engine optimisation
- Video production
- Animation
By their very nature, freelancers work for other people, but they have ultimate control over the rates they charge, when they work, and who they work with.
Interestingly, some trades are not commonly referred to as freelance, even though the business model operates in precisely the same way. A plumber who trades independently, with no larger business employing them, is unlikely to describe themselves as a freelance plumber.
Likewise, someone who makes wedding cakes will probably not be a freelance cake maker. But, sticking to the wedding theme, a photographer working alone as a wedding photographer would probably describe themself as a freelance photographer.
Etymology of freelancer
For those interested in where the term ‘freelancer’ originated, it was first used in English in the early 1800s to describe medieval mercenaries who would fight for the highest payer. The earliest evidence of its use is in Sir Walter Scott’s novel Ivanhoe.
Self-employed explained
Self-employed is a more extensive term than freelancer. Whereas freelancers can indicate the type of work someone does and how they go about doing this, self-employed is more all-encompassing.
A freelancer typically refers to someone who works alone to provide a specific service to a client; because it’s so vague, self-employed is generally the more appropriate term for someone who runs a more significant business and takes care of everything that comes with this, such as:
- Recruiting and managing employees
- Managing systems that help the business function
- Remaining legally compliant
Furthermore, whereas a freelancer will operate as and when they wish as long as they meet their deadlines, a self-employed person (or at least someone choosing to refer to themselves as self-employed) running their own business will probably work set hours to accommodate their customers’ needs.
Freelance vs. self-employed: an example
How would you describe your business? Consider the following:
- ‘I am a copywriter’
- ‘I run a copywriting business’
The former statement gives the impression that someone is either a paid employee working for an employer or – more pertinent to this article – a freelancer. They are given a brief and then go off to provide their service, written content. There might be some back-and-forth with the client, but their sole focus is meeting that need and working to a deadline.
The latter statement, while it could be how a freelancer describes themselves, would probably be more appropriate for a self-employed person who has set up a business dedicated to providing copywriting services.
They will undoubtedly be involved in copywriting in some capacity, but they will likely also have several other business responsibilities connected to the operation. For example, perhaps they have a team of writers they work alongside and manage, or maybe another wing of the business provides associated services, such as social media management or web design. They might even hire freelancers occasionally to help provide these services.
Freelancers are always self-employed
It would always be appropriate for someone working as a freelancer to also describe themselves as self-employed (unless, strictly speaking, in the eyes of HMRC, they’re operating as a limited company). This is because the term self-employed is so broad.
However, self-employed individuals would not always categorise themselves as freelancers. This is because the term freelancer is more focused.
Freelancing is very much associated with specific types of work and the scale of the operation involved (more minor). Self-employed is more generic, but because of this vagueness, it is more likely to be used by someone running a larger-scale business.
Essentially, this has more to do with what the term freelance alludes to, rather than any direct meaning that can be taken from self-employed.
What about business structure?
Whether you choose to define yourself as a freelancer or just as self-employed, you must operate through a suitable business model.
The UK’s two most popular structures are sole trader and limited company. What’s right for you will depend entirely on your circumstances.
You may have read that, as a freelancer, the sole trader model is more appropriate for your scale of operation. However, this is a matter of conjecture. There are certainly freelancers who find that the limited company model is suitable. Likewise, there are situations when, for a non-freelance business (so only the self-employed definition is suitable), the sole trader model is more apt.
Take a look at this article for further guidance on choosing the right business structure: Sole trader or limited company – which is better for me?
There you have it
We hope you are now clear on the similarities and differences between the terms ‘freelancer’ and ‘self-employed’.
If you are starting up your business and have decided that a limited company represents the best startup path, we can help through our range of company formation packages. Prices start at only £51.99, and companies are typically registered within 24 hours. Get started by clicking the link below:
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Thanks for reading. Please leave a comment if you have any questions.
