The terms “freelance” and “self-employed” often get thrown around like they mean the same thing – and in some ways, they do. But if you’re working for yourself or thinking about it, it helps to understand the difference. It could affect your tax obligations, how you invoice, and how you present your business.
Freelance: Project-Based, Often Solo
Freelancers are usually hired for short-term or ongoing projects. You might be a graphic designer, writer, photographer, web developer, or social media specialist. Freelancers often work with multiple clients at once and are paid per job or hourly. They usually work alone and don’t employ staff.
In New Zealand, most freelancers are legally self-employed, but the word “freelancer” gives a clearer picture of their work: flexible, remote, and often creative or tech-based.
Self-Employed: Broader Definition
If you’re self-employed, it means you work for yourself and aren’t on someone else’s payroll. That could include tradespeople, consultants, store owners, service providers, or contractors. You might work on your own, or you might employ others. You might invoice directly or operate under a business name.
Inland Revenue treats both freelancers and sole traders as self-employed for tax purposes. How you structure your business, set your rates, and scale up can look very different.
Why Does the Difference Matter?
It’s not just about job titles. Understanding the difference can help with:
- Setting clear expectations with clients
- Choosing the proper business structure
- Deciding when (or if) to scale up and hire staff
- Marketing your services more effectively
For example, a freelance designer might build a personal brand, while a self-employed plumber might focus on growing a business with a recognisable trade name.
Still Not Sure Which One You Are?
If you’re running your own show and trying to figure out the best way to structure it—or just want help clarifying your goals—you can book a time here to chat.
NZ Business Coach – helping small business owners and freelancers across New Zealand make smart decisions and build businesses that work for them.
