Takeaways
- Freelancers account for nearly 38% of the U.S. workforce, which is growing.
- Freelancers manage all aspects of their business, like accounting, finance, and more.
- Freelancers determine their hourly rates, project fees, and monthly retainers.
- Freelancers can work for multiple clients, accruing many stable, high-paying clients.
- Freelancers must handle taxes, healthcare benefits, and other administrative duties.
Becoming a freelancer has been a recent trend among many American workers who want to add an extra income stream to their finances, increase their flexibility, and work at jobs they love. According to a recent study, there are over 64 million freelancers in the U.S. economy, and the number only seems to be growing.[1]
If you are thinking about freelancing, here are some of the growing trends among surveyed freelancers and their outlook on the economy:
- Freelancing Hit All-Time Highs: 38% of the American workforce freelanced in 2023, a significant year-over-year increase.
- All Generations: While Gen Z and Millennials are more likely to explore freelancing, older workers enjoy its benefits.
- Positive Outlook: 85% of freelancers think their prospects are only growing.
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What Is a Freelancer?
A freelancer is an independent professional who creates their own business and offers their skills and services to multiple clients. Many freelancers set up their own C Corporation or Limited Liability Corporation (LLC).
As a freelancer, you typically do not commit to any single client long-term. This kind of work arrangement provides a high degree of flexibility. You get to choose the projects that best match your skills and interests. As a freelancer, you would manage all aspects of your business, like setting your work schedule, determining how much you charge clients, and handling administrative tasks like invoicing, billing, and taxes.
What work is available to freelancers can vary widely. There can be short-term assignments and long-term projects. Freelancers are in many fields, including writing, graphic design, consulting, and technical specialties.[2] Freelancers work from home or other remote locations, allowing you to work with clients globally. This type of independence comes with its own set of challenges. To be a successful freelancer, you need self-discipline and to understand the business's uncertainty because of fluctuating workloads and incomes.
Even with the challenges, freelancing can offer significant benefits. Freelancers enjoy a better work-life balance and the opportunity to earn higher incomes based on their ability to secure and complete profitable projects. Success in freelancing also depends on your ability to network, negotiate contracts effectively, and consistently deliver high-quality work.
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5 Reasons to Become a Freelancer
Becoming a freelancer is a significant personal and career decision, but it can offer tremendous benefits and opportunities. These advantages typically revolve around personal growth and flexibility. Here are several reasons freelances are drawn to this type of work:
1. Control Over Your Schedule
One of the primary advantages of freelancing is the ability to control your work schedule. This allows you to better balance between your professional responsibilities and personal life.
As a freelancer, you decide when and where you work, and that’s particularly appealing when you want to avoid the rigid schedules of traditional 9-to-5 employment.
2. Determining Your Worth
Another significant advantage of freelancing is controlling your finances. As a freelancer, you can set hourly rates and project costs and dynamically increase your income based on the demand for your skills and ability to manage projects.
Finding this level of financial autonomy is rare in conventional jobs because you work for a set salary. Employers can make you work way beyond 9-to-5 without adjusting your pay. In the traditional workforce, salaries are often fixed, and salary increases are infrequent, minimal, and hard-fought.
3. Professional Development
When you become a freelancer, your opportunities for professional development are also enhanced. You get the freedom to choose the projects you want to work on and select ones that challenge your skill set and help you evolve professionally (while your client pays you for this).
Continuous learning and adaptation can lead to high levels of job satisfaction and personal achievement. Many freelancers become hooked on this optimism and, as a result, avoid traditional corporate employment opportunities.
4. Workplace Flexibility
Once you are a freelancer, you don’t have to be bound to in-person office work. Instead, freelancers enjoy the ability to work from virtually anywhere.
Working from home, at a coffee shop, or flexible workplace can be convenient and reduce commuting costs and time. The flexibility of where you work can lead to a sense of personal freedom and happiness.
5. Increased Business Skills
Freelancing can enhance personal and business management skills. As a freelancer, you must handle the entire business engagement. This means sourcing work, handling client interactions, negotiating contracts, managing business operations, and delivering final work products.
Being able to manage the entire lifecycle of an engagement is what increases business acumen quickly. Successful freelancers must develop strong communication, organizational, and client management skills.
Overall, freelancing allows you to take control over your career path and work environment and provides a better work-life balance. If you consider yourself a self-starter or entrepreneur or simply want to command your schedule, freelancing could be perfect for you.
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Reasons to Keep Your Day Job
While freelancing offers many appealing tangible and intangible benefits, it is only fair to acknowledge that it presents many challenges. Here are six disadvantages to consider before diving into freelancing:
1. Unstable Income
Unlike how a traditional salary works, a freelancer’s income can fluctuate wildly based on client demand. This can be particularly acute when you are just starting your freelancing business. There is no guarantee when it comes to a monthly salary. Financial stability is more challenging in this line of work, so it is essential to master budgeting for irregular income flow.
With freelance work, your income is directly tied to the number and type of projects you take on. In the beginning, you might have to take on projects you need rather than projects you love. However, as your book of business evolves, you can calibrate what clients you want to work with.
2. Lack of Employee Benefits
Freelancers operate their businesses, which means they are not employees who receive traditional employee benefits like health insurance, paid leave, or retirement plans. To receive these benefits, freelancers must set these up themselves or join a healthcare network.
Setting up healthcare and other benefits can seem daunting to many people because it can pose significant downside risks to obtaining healthcare, retirement savings, or life insurance. Freelancers with an entrepreneurial spirit won’t mind figuring this out at all.
3. Isolation and Loneliness
Working from home can be a double-edged sword. Many freelancers take advantage of not having to go into the office, so they usually work at cafes, their home office, or shared working spaces.
Working alone as a freelancer can often produce feelings of separation or loneliness. Solo freelancers don’t have coworkers, which means you lose the day-to-day office banter and accompanying camaraderie. If you thrive on social interactions within the traditional workplace, you must build this into your day.
4. Tax and Administrative Responsibilities
Freelancers must handle tax filings and administrative duties. You must also familiarize yourself with all aspects of your business, like accounting, finance, compliance, and legal requirements.
Learning these new business skills can be daunting for new freelancers, but this can lead to increased business understanding and boost your long-term earnings. Without experience in these administrative areas, it can feel like they take away time spent on money-making activities. Many freelancers will outsource these admin tasks.
5. Finding Clients
Finding and retaining clients is a significant challenge for freelancers. When you are first starting your freelancing business, this could be particularly tough. Building a client base that provides consistent work will require a significant amount of your time and effort.
Many freelancers take the leap knowing they have one or two reliable sources for client projects that make them feel more comfortable branching out independently. From there, you can build on your success and use your current client base to expand your business even more. You can work hourly or work by charging clients a set monthly retainer.
6. High Levels of Responsibility
As a freelancer, you are solely responsible for your business's successes and failures. There is nowhere to hide in both boom and bust times.
You are responsible for managing multiple projects, meeting your client’s expectations, and dealing with any issues. This burden of wearing multiple hats in a company can be thrilling, overwhelming, exhausting, stressful, and rewarding.
Smart Summary
Freelancing might not have even crossed your radar as an opportunity. For most, it takes an encouraging nudge from family, friends, or a potential client to wade into freelancing. However, freelancing can be an excellent opportunity if you have an entrepreneurial spirit, enjoy a work-life balance, and want to manage your destiny. Many freelancers find it can pave the way to achieving financial freedom faster than if they stayed at their former employer.
Still trying to embrace a full-time freelancing career? Learn about other ways to boost your income with side hustles.
(1) Upwork. Upwork Study Finds 64 million Americans Freelanced in 2023, Adding $1.27 Trillion to U.S. Economy. Last Accessed January 16, 2025.
(2) National Endowment for the Arts. Who Goes Freelance? The Determinants of Self-Employment for Artists. Last Accessed January 16, 2025.
