Freelancer vs Employee: Which is better and how do I start?

Alexander Rasmussen
Written by Alexander Rasmussen
on August 03, 2023 7 minute read

If you’re here for the quick and dirty answer, check out the side-by-side comparison chart below. If you want more specifics, links, tools and perspective… read on! Forewarning, the quick and dirty will only give you insight into some of what differs from working as an employee and freelancing.

Where were you the first time you heard about freelancing? When you heard you could break away from the everyday norm — the confines of a 9-to-5 — to sell your life earned experience on your terms? The idea sounds inherently beautiful.

But we aren’t here to be overtly biased, so I invite you to remember a time when you were a kid and learned that you could make your very own real money with a job. Remember how badly you wanted your first gig? I certainly do.

Whichever side of the professional house you live in, there are pros and cons to both. The tiebreaker truly comes down to knowing what’s right for you, and your situation. You may be the perfect candidate for freelancing, but knowing if it’s the right time to do it can make all the difference to whether you’re successful or not.

However it may be, as the fully fledged and talented professional that I’m sure you are, full-time freelancing is an option that’s always available when you’re ready. The name of the game is level-headed planning, Kings and Queens — so take your time in deciding which (or both) career options are right for you.

Quick Side-by-Side: Differences between freelancing and employment

The side-by-side list below is not exhaustive, but it does well in providing a few key differences between freelancing and employment. I recommend deep-diving into How to Start Freelancing in 2023: The Ultimate Handbook, if you want to learn more. Not only does it breakdown important information about being a freelancer — like evaluating your skill set and defining a niche to work within — it covers many topics commonly overlooked by aspiring freelancers, the currently employed (self-starting is what freelancing is all about, so get to it).

Pros and cons of being a freelancer



Choose your own clients

Finding them is your responsibility

Uncapped earning potential

Taxes, insurance and other provisions are your own responsibility (Destroy this Con with Xolo! Your ultimate freelance tool)

Time off whenever you need

Time off is almost always unpaid

You’re your own boss

May lack the support of a larger team

No office politics 

Potential lack of comradery

Incredible work-life balance

Requires self-discipline and drive


Pros and cons of being an employee



Secure and consistent work

You don’t always get to choose who you work with, or what you’re working on

Taxes (outside of filing them) are generally handled for you

Fewer options for tax exemptions, deductions, and other accounting magic possible when running a business

Paid time off

Not always available and often interrupted, limited

Social interactions

Office politics

Teams, collaboration and experienced people to learn from

A lack of freedom with project direction and outcome

A consistent salary regardless of the amount of work incoming

Your earning potential is capped, and up to others outside your control

How much does a freelancer earn?

Virtually as much as they want, with no cap on earnings. 

Net earnings boil down to you, your skills, and how you market yourself to prospective clients. As a freelancer, you're not simply doing your job, you’re running a solo business and responsible for handling multiple departments.

👊 Strategic plug! Thankfully, companies like Xolo offer solutions specifically to assist you with overcoming pesky learning curves associated with starting a freelancing career. You can even offload those mundane (and utterly important) accounting and admin tasks.

If you already know what you’re all about, and are dead set on taking the plunge into becoming a freelancer (or already out there bossin’ it up), then check out Xolo Go!

If you already command these skills, you’re primed for higher earnings right out of the proverbial gate — it sounds like freelancing is probably right for you!

The surfeit of factors to consider — dictating whether you’ll earn more or less money — is better understood by diving into third-party data that’s readily available online. At the very least, take into account the following:

  • Industry
  • Country (local regions too)
  • Freelancers in your area (competition)
  • Skill level (be honest here, it’s important)


Researching and critical thinking are excellent skills to wield as a freelancing professional. When researching, use as many sources as possible allowing you to draw the best conclusions on your findings. Don’t take anything for granted when it comes to making money. As we used to say in the US Army, “Slow is smooth, smooth is fast”. It means take your time and be purposeful —  you’ll make less mistakes.

In 2019, surveyed their community to find out whether they earn more working as freelancers compared to their earnings as an employee (see figure 1 below). A whopping 61% of their respondents reported earning more as a freelancer (it would be safe to assume that these are gross earnings).

Freelancer earnings vs employee earnings

A popular UK employment platform, Indeed, reports the average freelance salary as £15.34 per hour (as of July 9, 2023, and having reached as high as £18.16 per hour in previous months), where as for an employee, the average hourly rate is £12.18, according to We can safely surmise that these figures are gross incomes for freelancers and employees based in the UK. 

At first glance, the numbers are seducing, and there’s a lot of talk about it around every internet watercooler. Just remember that there are always additional overhead expenses in need of consideration before you allow the numbers to sweep you away. Some figures may have conveniently left out expenses — and that’s a figure specific to everyone.

I can’t stress enough how important your own personal research is before jumping into your journey of full-time freelancing.


Freelancing or Employment? Which is right for me?

If you enjoy learning, being in a fast-paced and self motivated environment, there’s a strong chance that freelancing  is the right choice for you. 

Of course, not every freelancer is out there running a thousand miles per minute, but there’s an inevitable hustle you must commit to, ensuring that you’re locking in a steady income, finding and maintaining long-term clients, and attracting new ones. This is how working as a freelancer differs most from working as an employee.

If you’re lacking skills and knowledge in accounting, taxation, and self-promotion, you’re going to need to be ready for learning.

👊 Strategic Plug! “WAIT, WHAT WAS XOLO GO!?”, you remind yourself calmly. Xolo Go is a tool supporting freelancers in professionally invoicing clients in 186 countries worldwide — and you’re only 10 minutes away from commanding excellence.

If you’re an employee, and you dream of getting out there and working as a freelancer, you need to start by being honest with yourself. You need to have a grounded, well thought out self-assessment of your skills and personality to understand if being a freelancer is right for you. Looking for a shortcut here will not lead you down the path you imagine, especially if you’re unable to complete the step of honest self-assessment. Having the right tools and delegating the right tasks can be your game-changer.

You’re not going to have a boss, you have to be the boss you won’t have. Can you do it? If the answer is “I’m not sure”, well… working as a full-time freelancer may not be the right path for you just yet. You may consider continuing or starting a part-time freelance career. You can always pivot later.

Potential difficulties with freelancing vs working as an employee

In a article discussing the difficulties of freelancing, they asked their community to shed light on the challenges faced when becoming a freelancer — these are the results:

Our freelancers noted the following issues as the most difficult part of being a freelancer:

  • Organization (23.5%)
  • Lack of consistent work (17.6%)
  • Uncertainty (11.8%)
  • Managing finances (11.8%)
  • Retaining intellectual property (11.8%)
  • Client management (5.9%)
  • Working unsociable hours (5.9%)
  • Freelancing platform commissions (5.9%)
  • Rejection from prospective clients (5.9%)”

Even at a quick glance, one can see that these challenges are irrespective of industry. Some of us are more than capable of handling many of these difficulties — maybe even all of them — but others will experience a high degree of difficulty if it's the first time they find out that a high level of organization is required to maintain their work efficiency.

Thankfully you’re not entirely alone, as freelance-centered Xolo is built to help modern freelancers with finding clients, connecting and teaming-up with others, handling their expense reporting, taxes and accounting, and even just letting you invoice (no company needed).

Top reasons to choose freelancing vs employment

In the USA, the top six reasons for freelancing are: wanting extra money, covering gaps/changes in income, being able to control your own schedule, wanting to be your own boss, for fun (something to do in spare time/side hustle), and not having many job opportunities.

Sharing one of these reasons alone doesn’t mean you’re ready to ditch the 9-to-5 and go full-time freelance. You need to be ready for this change, and simply needing more money or a change of pace in your professional life shouldn't be the qualifying factor for changing your professional undertakings. Lay the foundation of your success, so when you jump off that ledge, you fly!

Just like taking on any other venture, project or adventure in life, it takes preparation to make sure that you won’t sink at the first sign of struggle. The cold, hard, honest truth about it (in most cases) often comes down to whether or not you have prepared yourself to absorb a couple of financial hits in the beginning. To think of it as an impossibility is too naïve.

How to get started in freelancing?

You've done the research, you've read the articles, and you've tediously gone through the data. You know freelancing is what you want to do, but you don’t know how to get started. Well, you’re in luck. Many have blazed the path before you and used their gained knowledge to take the pain out of starting your freelancing career.

In case you forgot, go check out How to Start Freelancing in 2023: The Ultimate Handbook. There's no question that this is the place to start for your freelance aspirations.

Xolo Services

Arguably, this is the most important part of the article. This is what I’m talking about when I refer to those who have blazed the trail before you — with Xolo Go, you can professionally invoice clients in 186 countries around the globe. 

And, If you’ve ever wasted time chasing down leads yielding little fruit, then Xolo’s freelancer platform is a no brainer — a top tier service dedicated to helping you find quality clientele. Xolo is a world-class team of professionals and freelancers ready to rock, it only takes 10 minutes to sign up. Happy freelancing!

New call-to-action

About Alexander

Alexander is a former US Army logistics management coordinator and attended the Estonian Entrepreneurship University of Applied Sciences from 2019 to 2022, studying entrepreneurial behavior, creativity, and business innovation. Since 2015, he has worked for Estonian finance technology and banking companies in customer support and data governance roles. His previous writing experience includes contributing articles within the cryptocurrency space, academia, and personal creative ventures. In his free time, Alexander enjoys connecting with friends and family, slayin' noobs in Destiny, and reading (if he sits down long enough).

Table of contents

    Discover quality, long-lasting clients and connect with talented freelancers using Xolo

    Join Xolo