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Freelance
Definition
Freelancing is a type of self-employment where individuals offer services to clients on a project or contract basis rather than being permanently employed by one company.
Explanation
Freelancers enjoy flexibility in choosing projects and setting rates but must manage their own taxes, benefits, and retirement savings. Common freelance fields include writing, design, programming, consulting, and marketing.
Freelancers typically charge higher rates than salaried employees to cover self-employment taxes, health insurance, and unpaid time off. Building a client base and managing irregular income are key challenges.
Example
A freelance graphic designer charging $80 per hour must set aside about 30% for taxes and cover their own health insurance.