Freelancing has experienced a boom in the last decade – with side-hustles and ‘digital nomads’ becoming more common, it’s hard to go online without seeing it mentioned somewhere. But how’s it different to just taking on different temporary contracts – which we’ve always known as ‘temping’?
While working as a freelancer and taking on temporary contracts do have many similarities – and it’s more than possible to do a mixture of the both – there are a few key differences which might help you to decide which would be a better option for you.
To some people, working as a freelancer looks easy – you get to hang out at home in your pajamas, maybe go to Starbucks for a couple of hours, and do a bit of creative work now and then. Unfortunately, freelancing (at least most of the time) isn’t like that at all! Freelancers essentially run their own business, so they’re responsible for administration, accounts, marketing, contracts, invoices and a lot more – as well as their actual job. Plus, not all freelancers are designers or creative types; there are freelance jobs in every industry, including IT, logistics, education, languages, construction, writing, events and a lot more! While some people thrive on the ever-changing challenges and responsibilities of freelance work, most freelancers will agree it isn’t suited to everyone.
One advantage of temporary contracts is that you can leave your responsibility at work, and you don’t take things home with you. You’ll work set hours and have specific responsibilities, likely well within your current skillset – very different from running your own business, where you often need to learn new skills on the fly and under pressure. You’ll know what you need to achieve, and know how long you have to get there – and if you prefer to have KPIs given to you, rather than developing your own, then you might be more suited to temporary contracts.
Structure (or lack of it)
Freelancers have to be good at prioritisation and time management, because they’re often working on several projects at once. Because there’s usually no set working hours, or a boss for support and guidance (and maybe a bit of accountability too), freelancers have to build their own structure into their working day. Some people thrive in this environment – and they work smarter and more effectively – but equally most freelancers will tell you this way of working doesn’t suit everyone!
On the flip side, temporary contracts can be a lot more structured than freelance work – you’ll likely have set hours of work, be given a list of tasks or goals to complete, and usually have a direct line manager to provide guidance and accountability. If structure and set goals are more up your street, but you still want a degree of flexibility, then perhaps working on temporary contracts is a better option for you!
Income tax and national insurance
If you’re a freelancer, you’ll have to keep records of your income and outgoings, then every year submit your records to HMRC. Some people choose to hire an accountant for this, which can be costly, and others choose to do it themselves.
It can be complicated, especially if you’re not naturally very paperwork-oriented, plus there’s lots to learn about what you can (and can’t) claim as a business expense. You’ll also need to keep some money saved to pay the inevitable tax and NI bills that HMRC sends you once you submit your tax return – which can be a worry for some, especially if you’re not sure what the bill will be.
On the flip side, a lot of temporary contracts already take tax and NI into account – for example, everyone on a temporary contract here at Protocol has their wages paid through PAYE, meaning tax and national insurance are deducted automatically and paid directly to HMRC for them. Not only does this alleviate complicated admin, it also means you’ll pay your contributions throughout the year, and have no shock tax bill land on your doormat sometime in January. You can relax knowing your tax and NI is paid in full!
If you’re a freelancer, the onus is all on you to succeed – you have to seek out projects, look for new work, stay motivated, and deal with inevitable setbacks. Add to this that work could end at any time – and while some thrive on this uncertainty, others find they need a bit more security.
If you’re looking for security but still want a degree of flexibility, temporary contracts could be the answer. While they don’t provide the same security as a permanent role, they do generally have a start and end date, so you can plan your future options accordingly.
Most freelancers will be working on several projects at any one time. Because of this, the workload can be more varied than a ‘regular’ job, and may require working evenings or weekends when you’re close to deadlines. You’ll likely be quiet sometimes and busy at others – and often the busy periods make up for the quiet ones. This can lead to more flexibility, because you can work when it’s convenient for you, which is one of the great benefits of being a freelancer. If you’re super organised, cope well with changes in workload, and thrive when switching between projects (like many creatives we know), this could be perfect for you!
In contrast, most temporary workers work on one contract at a time, and start a new one once that’s over. Temporary contracts often come about because the organisation needs extra help during busy periods, or support on a project with a set deadline; so they tend to have a standard workload that will fit into the hours of the contract. If you prefer to focus on one thing at a time, and like your workload to be at a steady level, working temporary contracts could be a better option for you.
Finding new work
If you’re a freelancer, it’s part of your job to keep an eye out for upcoming contracts. A good freelancer will always be looking for and pitching for new work, so when one project (and the income from it) ends, they’ve got something else lined up to replace it.
There’s plenty of ways to look for new work – you can sign up with a specialist freelance agency, use freelance work sites (like People Per Hour, Freelancer, Upwork, and Monday), or ask around within your network to find new projects to work on. You’ll likely want to build incoming enquiries too, which can come from your past clients spreading the word, or maintaining a good website and/or professional social media accounts to get noticed.
One benefit to freelancing is that you get to choose the clients you work for – and you can be selective about the projects you work on. However, being choosy relies on you having lots of offers of work, which might be a tall order, especially if you are just starting out, so you might have to take a few projects which weren’t on your bucket list! You’re likely to have to spend much of your working time seeking out and pitching for new work – and none of this time is paid. So while you might earn more for the hours you are paid, there might be less of them overall!
However, if you’re temping – and signed up with a good agency – you’ll automatically be notified of relevant new contracts as they become available. If you know your contract is coming to an end, you can notify your recruiter so they know you’ll be available soon, meaning you don’t have to trawl through job boards to find your next contract!
In addition to this – just like freelancing, you still get to choose which organisations you work for!
It’s well publicised that freelancers can earn more on an hourly basis than those on a traditional contract. Many also work from home, so money can be saved on travel and other associated work expenses.
However, it’s not always as straightforward as that – you might have to take into account software licences, tools and equipment, travel or vehicle maintenance, ongoing training, and the many hours of admin and business development that are unpaid. While some of these costs could be offset when you complete your yearly tax return, that’s a long time to wait! Add to this that your income might fluctuate month on month – it turns out freelancing might not be a viable option for everyone.
With temporary contracts, however, your income is set at a standard amount each month, meaning financial planning could be much easier for you, as you’ll always know how much you’ll be earning. You’re also paid on an hourly basis, meaning you won’t be doing any unpaid work – and some contracts even offer overtime payments. So while the hourly rate might seem lower at first, when you’ve factored in all of the above drawbacks of freelancing, you might not be as worse off as you might think.
Are you more suited to freelance work, or temporary contracts? Are there any differences you think we’ve missed? Join the conversation over on our Twitter page!
If you’re looking for your next temporary role – check out our current temporary vacancies here.