1. Money

Consulting vs. Freelance

Understanding How They Differ and Why it Matters

By

It’s not unusual to interchange the terms consulting and freelance when describing the services you perform as a contract worker. However, each word has a very different connotation when describing the type of relationship you plan to have with customers. Understanding these differences is an important part of positioning your business for future success.

First, let’s consider the formal definition of what it means to be a consultant as opposed to the definition of a freelancer. And then I will explain why the differences matter.

Consultant: a person who is paid to provide professional or expert advice in a particular field or specialty.

Freelancer: a person who works independently, selling work or services by the hour, day, or job, with no intent to pursue a permanent or long-term arrangement with a single employer.

It’s easy to see how you might confuse the two. After all, both convey the idea of performing work or services for other people or companies.

To further emphasize the difference, take a look at the synonyms commonly associated with each term. Synonyms for consultant may include like-descriptors such as, advisor, guru and specialist. Synonyms for freelancer tend to be tied to a specific career field or job title, and most commonly that of writer, journalist and graphic designer.

Why does it matter? It’s all about client perspective.

When hiring a freelancer, customers tend to think of using your services for a short-term project with a very specific outcome. For example, writing a case study or designing a brochure. As a freelancer, your role is to take initial direction from the client and then go off and complete the assignment. Typically, the work is done off-site, using your tools and resources. You control nearly every aspect of the project, including determining the best method for tackling the project and deciding the necessary timeframe for completion. Once the project is finished, your relationship with the client ends - at least until the next project comes along.

As a consultant, your clients look to you for detailed guidance on a particular area of expertise. For example, you may be hired as a crisis communication consultant or a marketing strategy consultant providing advice to the client. In many cases, the scope of the project is more extensive, and could include several smaller projects within the overall agreement. For instance, a marketing consultant may be hired to conduct competitor research, organize focus groups, oversee the development of an ad campaign, and write a marketing plan. For that reason, the work may occur as part of a long-term or ongoing commitment, as opposed to having a definitive start and finish date across only a few weeks.

If you are working on-site for the client, using the client’s resources, and have your schedule dictated by the client, then you may also be considered an employee (under the definition of the IRS). In that case, you will receive a W-2 for the tax year, instead of a Form 1099 for miscellaneous income as an independent contractor.

Is the work of a consultant more valuable than that of a freelancer? No, absolutely not. The value of your services lay in the quality of performance and whether or not the objective of the project is achieved. However, the way in which you categorize your work does shape how your prospective clients view your terms of service. As a freelancer, you may be hired on a project-by-project basis; while as a consultant, you could land a long-term gig that may even lead to permanent employment.

  1. About.com
  2. Money
  3. Consulting / Freelance
  4. Getting Started
  5. Consulting vs. Freelance

©2014 About.com. All rights reserved.