IT Contractor vs IT Freelancer: What’s The Difference?

Quite often, these terms get used interchangeably, but there are some key differences.

An IT freelancer is a self-employed person who:

  • Pays their own self-employment taxes.
  • Doesn’t have any employees, but can subcontract the work to others.
  • Sets their own rates.
  • Works at a location of their choosing.
  • Works with multiple clients or just one.

An IT contractor is a self-employed person who:

  • Typically will work with one client at a time, often full-time on a particular project for several months.
  • In many cases, work for an hourly rate.
  • Might work through a third party or agency but can also work on their own. If an independent contractor works on their own, they are responsible for taxes and insurance. If they work for an agency, in some cases that agency may be responsible for paying their taxes.

Both freelancers and contractors are effectively small business owners. For some, it’s a lifestyle, for others, it’s halfway to having their own company. Which one are you?