But to illustrate the practical differences between employment and freelancing, imagine for the moment that you’re an accountant. If you’re employed full time in somebody else’s organization, you’ll probably be expected to report to a regular workplace on a regular schedule, and you’ll be kept busy reconciling bank statements to the organization’s records, preparing tax returns, issuing financial statements, perhaps handling billing for the group, and preparing financial performance records for the organization’s management. In return for your work, you’ll probably receive an agreed-upon salary paid incrementally every couple of weeks, paid time-off for health or personal reasons, health insurance benefits and paid vacation time.
On the other hand, if you’re an accountant who works as a freelancer, you might perform many of those same tasks for an outside organization, yet your work will happen differently. You’ll probably work on your schedule, not necessarily on the organization’s required “8-5” schedule; you may do most if not all of the work in your own office (maybe your home); and you’ll provide all your own equipment and office supplies (computers, software, telephones, etc..). Oh, and here’s another big difference: you’ll pay all your own income taxes, including an additional “self employment tax;” and you’ll have to fend for yourself when it comes to insurance benefits. In short, a freelance accountant is a business owner, not an employee, and the individuals and organizations for whom they provide accounting services are clients, not their employer.
If being a freelancer sounds challenging to you, rest assured that your hunch is correct. But here’s another little-known fact that escapes politicians and media professional alike: at a fairly rapid pace, Americans are learning to make a living as freelancers even when they can’t find “jobs.” The monthly “jobs” report for the most part completely ignores this trend. Yet according to the private non-profit “Freelancers Union” organization, the number of freelancers has expanded by about 400% over the past five years alone.
The current lackluster state of job creation is a direct result of bad government, namely the federal Obamacare law. It’s unclear how much higher the unemployment rate will need to rise and how many more full time jobs will need to be “converted” to part time jobs, before Americans wake up and realize that we have empowered some very destructive public policy that is creating far more problems than solutions.
But business is still happening despite all the roadblocks that government creates. Individuals and organizations are finding ways to legally form partnerships wherein they can be helpful and productive with one-another, even though politicians have been allowed to run amuck and poison employer-employee relationships.
Don’t expect Barack Obama, Harry Reid, Mitch McConnell, Nancy Pelosi or John Boehner to understand the real dynamics of the labor markets any time soon. They are too busy posturing, blaming, and blabbering about “jobs,” and their behavior won’t change until sufficient numbers of us demand a change. In mean time, there is opportunity at hand – for those who are willing to search for it.
Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.
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