Freelancing vs. Full time W2 employee

When you decide that you want to work as a software developer, there are generally two options for how you want to do it: freelancer or employee. Deciding which direction is best suited for you depends on numerous factors. Freelancing brings with it independence; you’re your own boss, you set your own schedule, and work when you want. However, this also means that you and you alone are responsible for all facets of the process such as invoicing, business development, advertising, and client management. There are also budgeting considerations, including the cost of health insurance and lack of paid time off.

It’s critical when deciding to consider if this is the right option for you that you are realistic with regards to your strengths and weaknesses. Some questions that you might want to consider are:

    Are you self motivated enough to be out on your own?
    Are you disciplined enough to maintain a consistent schedule working from home? Some people are easily distracted with their every day home happenings and this is certainly not a good trait to have if you’re going down the freelance route.
    Are you able to stomach chasing clients down for overdue payments?

As a freelancer, you don’t always have readily available resources when knowledge gaps occur. The collaborative environment of a group can be a very valuable resource when you come across the inevitable road block.

I know many “career” freelancers who revel in all it has to offer. However, more often than not there is limited long term growth potential. When you belong to an organization, you have far more growth opportunities than simply going at it alone (just ask the admins and janitors who were early employees at Google who made a king’s ransom in stock options). That being said, some people work better individually, while others need the collaborative environment of a group. As far as compensation goes, the advantages are clearly in favor of freelancers. While a full time W2 back-end Drupal developer can earn between $85,000-$95,000 a year, a freelancer can easily exceed that figure if they’re capable of putting in the billable hours. In addition, setting your self up as your own LLC has significant tax advantages that W2 positions just don’t offer. The U.S tax codes are very pro business; just about anything from business trips, business dinners, and even a portion of your house or apartment can be written off as a deduction.

So what’s better? This will vary from developer to developer. Perhaps the ideal way to go is to try both out and seeing first hand how both options work for you.

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