Entrepreneur finds a niche in the market, or in other words, one discovers a need and then has an idea to meet that need. Taking a risk with its own (or an investor’s) money to set up a business that meets that need.
Freelancer also identifies needs. But rather than looking for a niche in the market, one looks for established markets and become a competitor in that marketplace. An example of that could be a design service useful for businesses that need and already pay for logo – this is an established market. Freelancer doesn’t take on big financial risks. One looks for clients, then does the work the client requests in exchange for payment.
Freelancer is not always considered serious
Even if you deliver only top quality services on time, you may bump up against the reputation that others have created after taking the money and running or dragging out a project for months.
Many clients may not take you seriously because of how you project your own image. Maybe you’re still using a mysite.wordpress.com URL rather than purchasing a unique domain name. Maybe you freelance on the side, and have missed deadlines or are not available to talk, since you only work in the evening hours. Whatever the reason is, it is difficult to get that confidence from others, you need to clean up and get serious about what you do.
Some companies won’t work with Freelancers
Some corporations have company policies against working with freelancers, especially if there are confidentiality issues in play. You limit the projects you can take on if you operate as an individual rather than a company.
You can outsource
As a freelancer, you do it all. If you could not find the time in your schedule, then can’t take on the project. But as soon as you shift into running a company, you can hire/outsource other writers, designers, or accountants — whatever services you provide — to expand what your company can do. You can take a cut of the profits for the work they do while continuing to make money on your own work.
If, when you think about where you want your business to be in a few years, you envision yourself managing others and growing a business, you simply can’t do that if you look at yourself as a solo freelancer.
You can make more money
Having more people help you bring in money for your new company means that you can increase your profits in other ways.
First you can charge more as a company, especially if you start charging a flat rate as opposed to billing hourly.
Second, having a company means that you could increase your profit in other way – optimizing the taxes over the company. How you could do that? Easily, find a location with low taxes suitable for your business and start the company there. If you don’t feel like staying for long period in one country then there are places that offer remote control over your company. For this step you should consider the services of a tax consultant.
One makes its own decision
As a conclusion, you could see that there are advantages in both freelancing and owning a company. One should consider all the features that could be offered and which is the best. Having into consideration the free movement as a freelancer or the stable appearance one makes as a company owner, at the end you should measure the pros and cons. Or just seek help from some business/tax consultant who could help you out finding a solution which fits you best.