The difference between sole proprietorship and freelancing can seem confusing, but they are very different. A sole proprietor is a business which has one owner. A freelancer is an entrepreneurial worker that works for one or many clients as an independent worker.
Freelancers Work Independently
When you are a freelancer you have the opportunity to work independently. You take your skills that you have and instead of working for the industry or corporations as an employee you work as an independent. You can set your own pay rate, work your own hours, and different locations even work out of your state. For example mail in your work or send in your work over the internet. A freelancer does not have benefits with the company that they work for. They do not have health insurance and they do not have a current system of retirement. As a freelancer they do not have a 401(K) savings system with the employers that they work for.
Categories of Jobs
The freelancer is usually in a special field. They can be found in many different areas but freelancers generally can be found in the areas of publishing. They are freelance writer’s journalists and copywriters that write for many publishers sending query letters for example, a single page letter stating a story idea asking if the editor would be interested in the full story. Freelancers are also web designer’s programmers and computer developers. Freelancers are graphic designers and some work in advertising as marketers.
Sole Proprietorship
A sole proprietorship is an one owner-business. There are sole proprietorships that can do the same types of jobs as the freelancer, but the difference is the business and the owners are legally one. If you want your business to have a different name from your own you will need to register the business as a fictitious name “Doing Business As”, or DBA, with the country clerk.
Service Company
A sole proprietorship as a service company and that has employees you have to have an Employer Identification Number (EIN) from the U.S. Internal Revenue Service. A freelancer does not need an EIN because they work independently and do not have employees. All of your assets and liabilities belong to the owner as a sole proprietorship. For example if your business is sued by a client they many go after your personal as well as your business assets.
Reference:
Freelancers Union : The Rise of the Freelance Class
SBA: Business Licenses and Permits
