Re: What is Freelancing?
For the benefit of those of us in the rest of the world, could someone perhaps explain to us roughly what the terms `W2' and `1099' mean?
Many thanks to Connie (off-list), Char (fresh back from the STC Region 2 conference, I presume?) and Marci for their speedy replies.
It seems that a 1099 in the US is what I would (from my UK perspective) call a freelancer or contractor, and that a W2 is an employee. Much the same distinction applies in the UK, but we tend just to use the prosaic terms `employed' and `self-employed'!
However, Marci makes a couple of noteworthy points. First:
If you're a contractor, the employer typically pays you the full amount of your before-tax (gross) income and reports it on the 1099. Money paid to freelancers is reported in the same way using a 1099. If you receive 1099 income, you are responsible for paying your own taxes.
(Connie also noted that a US freelancer gets 1099 statements from all organisations that have paid the freelancer for services.)
As a freelancer in the UK, I'm responsible for paying my own taxes etc. (on an annual basis). However, I operate as an independent business. There is no employer, and the company or individual for whom I do the work (my client) is not responsible for reporting my earnings in any way - that's entirely up to me.
Second:
I think of contractors and temporary employees as those people who are employed by a company to work on-site for a specified period of time, often through a third party (contract or temp agency), and are typically paid an hourly rate. Freelancers typically work off- site to complete a specific project, usually through their own business entity rather than a third party, and may be paid an hourly rate or a project rate.
The on-site/off-site distinction is an interesting one. I typically work off-site, though occasionally do small amounts of work on-site for clients, where it's more convenient.
Sometimes I'm paid an hourly or daily rate; sometimes I'm paid a fixed fee for a project. So I don't know whether that makes me a contractor or a freelancer!
Temporary employees in the UK are indeed usually provided to a company by an agency, but I'm not sure whether they are generally classed as employees of the agency or of the company they do work for. In any case, they are more like employees than freelancers or contractors, as far as I'm aware.
Best wishes,
Sandy
Ambertext, 2/Gf Bruntsfield Crescent, Edinburgh EH10 4EZ, Scotland
+44 (0) 131 447 9257 http://www.ambertext.co.uk/ sandy -at- ambertext -dot- co -dot- uk
Sole proprietor: Alexander J Nicholson
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RE: What is Freelancing?: From: Marci Bethel
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