What’s The Difference? Self-Employed, Freelancer, Business Owner, Or Solopreneur

By Kat Boogaard

5 min read

From self-employed to freelancer to business owner to solopreneur, there are a lot of terms out there that all seem to represent the very same thing: People who break free from traditional employment and opt to earn an income their own way.

But, even though these words are often used interchangeably, do all of these labels really mean the same thing? Or, is it more like comparing apples to oranges?

There’s no denying that these categories all have their similarities. But, let’s dive into what each of these terms actually means—as well as the major differences between them.

Does It Matter What You Call Yourself?

Before we roll up our sleeves and get to the definitions, let’s take a moment to address the elephant in the room: Do you really need to know what to refer to yourself as? Does it really carry any weight?

While you probably won’t have a policeman knocking on your front door if you refer to yourself as an entrepreneur as opposed to a freelancer, finding the right label that fits your career or business is still important.

Why? The biggest reason is that it has certain implications for how you’re perceived by your clients and customers. Calling yourself a freelancer, for example, sends the message that you’re available for hire and for a variety of different projects. A solopreneur, however? Prospective clients might assume that you’re doing your own thing—meaning you aren’t available for their work.

Another big concern is whether or not the category you fall in will have an impact on the taxes you pay. However, that’s actually not as critical as you might think.

Whether you’re self-employed, a freelancer, a solopreneur, or a business owner, you’ll be required to pay self-employment tax. You will also likely file out 1099 tax forms to report your income.

The only tax difference you might face is if you’re a business owner with things like employees and a storefront. In that situation, you’ll have other tax matters to attend to than someone who truly works solo.

So, now that you know the importance of finding the right descriptor for yourself, let’s figure out what each of these terms actually means.

When to Call Yourself Self-Employed

The Definition: Earning income directly from one’s own business, trade, or profession rather than as a specified salary or wages from an employer.

Put simply, to be self-employed means that you are your own boss. You have the say in how you work, when you work, and even often what you create and produce.

Even further, self-employed is the government’s preferred term for someone who is an independent worker without a sole, ongoing employer.

Example Scenario: Robert is a woodworker who considers himself self-employed, as he builds kitchen tables in his woodshop and then sells them for a profit.

Best Synonyms to Use: Business Owner

When to Call Yourself a Freelancer

The Definition: A person who pursues a profession without a long-term commitment to any one employer.

At first glance, this seems awfully similar to being self-employed. And, in all honesty, the two can be used interchangeably without any major error—especially since both freelancers and self-employed people will fill out 1099 forms at tax time.

However, the biggest difference here is that a self-employed person could work largely on one type of project or work for one client—or even on work that they create for themselves without being assigned or commissioned (like Robert does in his woodshop).

A freelancer, however, wouldn’t share that same level of commitment to a sole client or project, and instead actively markets him- or herself for a variety of work to fill his or her plate.

Example Scenario: Carrie is a freelance writer who authors web copy and blog posts for a variety of different clients in the healthcare space. She prefers to refer to herself as freelance—as opposed to self-employed—to send the message that she doesn’t make her own work, and instead works on a wide array of projects.

Best Synonyms to Use: Self-employed could potentially fit the bill, but this term is often best left in its own category to capture the desired degree of flexibility.

When to Call Yourself a Business Owner

The Definition: Individual or entity who owns a business entity in an attempt to profit from the successful operations of the company. Generally has decision making abilities and first right to profit.

The easiest way to think of a business owner is to picture someone who has very specific products or services to sell. They may even have a brick-and-mortar business, a storefront, and employees that they use to make these sales.

Rather than tailoring their skills and services to meet the demands of a client or customer (like a freelancer would, for example), most business owners have an established and structured offering.

Example Scenario: Betsy owns her own small storefront in Portland, where she sells the pottery she creates. She has two full-time employees and three part-timers.

Best Synonyms to Use: Self-Employed

When to Call Yourself a Solopreneur or Entrepreneur

The Definition: One who organizes, manages, and assumes the risks of a business or enterprise.

This one is easiest to differentiate out of all of the above terms. While this category still represents someone who works on his or her own, there’s one major difference.

Rather than offering something that’s already understood and well-established (from kitchen tables to writing services, for example), an entrepreneur has some sort of innovative idea or solution that they’ve developed independently.

Example Scenario: Jason noticed a problem that needed to be solved in field service businesses. So, he developed a customizable software solution that made it easier for these businesses to schedule and monitor their field service technicians and representatives.

Best Synonyms to Use: Business Owner

Over to You

Yes, there’s a lot of gray area between these different terms. And, in all honesty, they can be used interchangeably without consequence. We promise, the IRS won’t beat down your door or make you wear a scarlet letter if you refer to yourself as a business owner because you really do own and operate your own freelance business.

However, which label you choose to represent you can have an impact on how you’re perceived by others. So, the important thing is to take some time to reflect on what descriptor best fits your career or your business.

Ultimately, it comes down to personal preference and the message that you most want to send about what you do and what you offer.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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