Are you stuck deciding between being a freelancer or a consultant? Not sure of which one you should call yourself? Do you ever wonder if there's even a real difference between these two roles? Well, get ready for the ultimate showdown: freelancing vs consulting.
In today's fast-paced gig economy, we often hear people throw around the terms "freelancing" and "consulting" as if they’re interchangeable. But they're not exactly the same. In fact, they have some pretty important distinctions.
Today, we’ll explore what freelancers and consultants actually do, uncover the differences between the two, and give you some handy tips to figure out which path suits you best.
By matching the right role title with your services, you can have a significant impact on how you position your services, what you charge, and how others perceive you in the industry.
Let’s get started…
What is Freelancing and Consulting?
These two terms are often used interchangeably, but let’s break down the official definitions of what a freelancer and consultant are.
What is a Freelancer?
Freelancing is a form of self-employment where individuals offer their services on a contract basis, working independently rather than as full-time employees.
A freelancer has the flexibility to choose their clients and the type of work they do, allowing them to establish their own business and freelance work on a short-term basis. They often collaborate with entrepreneurs, startups, and businesses who are seeking specialized expertise without committing to hiring a person full-time.
Now you might be wondering…
Are Freelancers considered Independent Contractors?
Most freelancers are usually considered to be independent contractors. (But not all independent contractors consider themselves freelancers.) While there may be some differences in the types of projects they take on and the number of clients they work with, the overall concept of being self-employed and working independently applies to both freelancers and independent contractors.
Both freelancers and independent contractors are self-employed and have the freedom to set their own rates, choose their projects, and determine their work schedules. They’re also responsible for their own taxes, such as self-employment tax, and do not receive traditional employee benefits.
But what consultants…
What is a Consultant?
Businesses typically hire consultants to get expert advice and guidance to tackle your business challenges. There are different types of consultants, each specializing in specific areas and offering unique services.
Here's a breakdown of the different types of consultants (though this is not an exhaustive list):
- Management Consultants boost organizational performance through improved processes and strategies.
- Financial Consultants provide expert guidance on financial planning, investments, and tax strategies.
- Marketing Consultants focuses on marketing strategy to enhance branding and advertising.
- IT Consultants optimize technology infrastructure, enhance security, and leverage tech solutions for efficiency.
- HR Consultants support talent acquisition, training, performance management, and ensure HR compliance.
- Strategy Consultants develop long-term plans, growth strategies, and conduct in-depth market analysis.
- Operations Consultants streamline operations, improve efficiency, and optimize workflows for better outcomes.
- Independent Consultants run their own consulting business, providing expert advice on a per-project basis, often offering flexible and bespoke solutions.
In this article, we'll specifically talk about independent consultants. These self-employed individuals have the flexibility to work with multiple clients and bring a fresh perspective to their business.
One key aspect that sets independent consultants apart is the value they place on building a strong reputation, particularly on social media platforms like LinkedIn.
By showcasing their expertise, sharing valuable insights, and receiving positive client testimonials, independent consultants establish themselves as trusted partners who excel in problem-solving, decision-making, and driving overall success for their clients.
So…
What is the Difference between a Freelance and Independent Consultant?
The main difference between a freelancer and an independent consultant lies in the nature of their work and the scope of their engagements. Freelancers typically focus on specific tasks or deliverables, while independent consultants offer expert advice and guidance to startup companies, entrepreneurs, and executives of large or small businesses.
When it comes to working independently, there are several key differences between freelancing vs consulting. Let's take a closer look:
1. Scope of Work
As a freelancer, you often specialize in specific tasks or deliverables, such as designing logos, designing user interfaces, or writing content or marketing copy. It's all about completing short-term projects with clear objectives.
On the other hand, as an independent consultant, you take a broader approach. You provide expert advice and comprehensive solutions to tackle complex business challenges your clients are facing.
2. Project Scope
As a freelancer, you'll usually have the flexibility to work off-site, utilizing your own tools and resources. You have full control over the project, from determining the best approach to setting the timeline for completion.
On the other hand, as an independent consultant, you may possibly find yourself working on-site at the client's location, making use of their in-house resources. In some cases, this on-site work arrangement might lead to being classified as an employee according to IRS guidelines, resulting in you receiving a W-2 instead of a 1099 form. (It’s best to check with a qualified tax accountant to be certain.)
3. Level of Expertise
As a freelancer, you're a skilled professional in your field, offering services to multiple clients on a project basis. You might have expertise in areas like graphic design, writing, or web development.
On the flip side, as an independent consultant, you're recognized as a subject matter expert. With your extensive experience and certifications, you offer high-level strategic guidance, helping businesses make critical decisions and develop effective strategies.
4. Client Relationships
As a freelancer, you often work directly with clients, completing individual projects based on their specific requirements. It's a project-by-project arrangement without long-term commitments.
As an independent consultant, you typically (but not always) build deeper and longer-lasting relationships with clients. You work closely with organizations, providing ongoing support, developing strategies, and implementing solutions over an extended period of time.
5. Education and Certifications
As a freelancer or consultant, your education and training may vary. Though some consultants require specialized degrees, the education of both roles can vary widely from person to person.
Certifications also differ, with freelancers typically focusing on technical training, and consultants often pursuing management or industry-specific training.
Now, let’s look at...
What’s the Same Between Freelancers and Consultants?
Believe or not, freelancers and consultants have a lot in common when it comes to their work.
Here are the similarities between freelancers and independent consultants:
- Self-employment: Both are self-employed and work independently.
- Expertise: They offer specialized skills and knowledge in their respective fields.
- Client relationships: They build rapport and provide professional services to both recurring and new clients.
- Flexibility: They have control over their schedules and work arrangements.
- Deliverables: They focus on delivering specific outcomes and results.
- Pricing: They determine their own pricing structure, such as hourly rates and/or project fees.
- Own boss: They have total autonomy and are responsible for managing their own business.
But…
Who Gets Paid more?
It really depends on a few factors like the industry, type of work, experience, and where you're located. Let's break it down:
In the United States:
- Independent business consultants make around $73,561 a year on average, which comes out to roughly $35.37 per hour.
- Freelancers in the U.S. have an average hourly rate of $20. However, if you're in skilled services like web/mobile development, marketing, legal, or accounting, you can earn even more at around $28 per hour on average.
- Different freelance roles have their own average rates: freelance writers earn about $30-40 per hour on average, editors make around $25-35 per hour, and programmers can earn $60-70 per hour on average.
In Canada:
- Independent business consultants in Canada have an average salary of about $99,278 per year, or roughly $50.91 per hour.
- Freelancers in Canada earn an average salary of $78,633 per year, with rates varying across different roles.
Remember, these are just average figures and your specific earnings may vary based on your skills, experience, and the demand for your services in the industry.
Is it better to be a Consultant or a Contractor?
While both consultants and contractors can offer profitable opportunities and flexibility in work schedules, there is a key distinction between the two.
Contractors are typically hired by business owners to fulfill specific tasks or projects, while consultants often have a broader range of responsibilities and provide expert advice in their respective fields.
So, if you prefer focusing on specific projects, being a contractor might suit you. On the other hand, if you enjoy offering a specialized area of expertise and being involved in various aspects of a business, consulting could be a better fit. Ultimately, it depends on your skills, interests, and career goals.
Is it better to Freelance or Work for a Company?
Choosing between freelancing and working for a company depends on personal preferences and skills. If you thrive on independence, have strong self-motivation, and excel at managing your time, freelancing can be a great fit. It offers flexibility and freedom.
On the other hand, if you value teamwork, enjoy company culture, and prefer collaborating with others, working as an employee might be more suitable.
Consider factors such as financial security, work-life balance, risk tolerance, and the ability to manage deadlines and schedules. Ultimately, finding the right fit depends on aligning your strengths and preferences with the nature of each option.
Supercharge Your Freelancing or Consulting Business with Practice
Whether you're venturing into the world of freelancing or embarking on an independent consulting journey, one thing is certain: managing your own business requires exceptional organizational skills. The administrative tasks, client management, and day-to-day operations can easily weigh you down, diverting your attention from what truly matters: your clients, your projects, and your bread-and-butter consulting services.
That's where Practice comes in!
Practice is more than just a platform; it's your secret weapon for entrepreneurial success. With our Customer Relationship Management (CRM) tool, you can centralize your client interactions, track progress, and nurture long-lasting relationships, all in one place.
By choosing Practice, you can finally break free from the overwhelming burden of administrative tasks and reclaim your focus on what truly matters: delivering exceptional service to your clients and exceeding their expectations.
Don't let the complexities of running your business hinder your success. Join Practice today and let us handle the nitty-gritty admin details while you shine in your expertise. Your clients and projects deserve your undivided attention.
