The tax system in the US works on a pay-as-you-go basis, so the IRS collects income taxes throughout the year via payroll. Ideally, if you are a W-2 employee, you automatically get your taxes withheld by your employer. However, as a freelancer, taxes aren’t a cakewalk. They have to pay a bit extra in “self-employment tax” to contribute to Social Security and Medicare.
Aside from the taxes, there are quite a few differences between freelancers and regular employees such as:
As an employee, you have to follow the dress code as per your company’s policies while on the other hand, as a freelancer you can wear whatever you want.
Freelancers can work remotely while an employee has to be confined within the office.
As a freelancer, you can decide your working hours. W2 employees have to work for a fixed amount of time, generally, from 9 am to 7 pm.
Here’s one of the biggest drawbacks of being a freelancer, there’s no fixed income. Your earnings depend on your project. However, as an employee, you get a fixed salary.
As a freelancer, you are the boss, you decide which projects to take, however, if you are an employee, you have to follow the hierarchy.
So, basically, the biggest worry for freelancers is the fluctuating income and the taxes. The latter can easily be taken care of by FlyFin. It is an AI-based tax engine that automates your expenses and helps you lower your taxes. Read more about how to make your tax effortless- https://flyfin.tax/