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BusinessWeek ran a piece recently that highlights some of the dangers of freelance work.

What is freelancing? It is the idea of offering your services as a way for businesses to outsource their work to you on a task-by-task basis. It's a tempting way to make a little extra money. When it works, you may be tempted to take on more. And often you will get more. And for a time it may seem like a nice cash cow.

From the standpoint of a private individual, the problems with freelance work are simple. First, it is unreliable. It can be feast or famine. And when a business decides to cut you off, you quickly discover that you have no real rights (since you weren't an employee to start with). The second problem is that there are usually few (if any) benefits involved. You may create income for yourself, but there isn't even the possibility of health insurance, a 401K (or some other retirement option), etc.

Scott Shane points out in BusinessWeek that there is a trend at the moment toward this sort of enterprise. Economists call it "non-employer business." It's part of the jobless recovery from the recession.

From a personal finance point of view, freelance work can put you in a dead end cycle of making enough to get by while always worrying about tomorrow and not planning at all for next year (or retirement). And it can keep you too busy to look for something better.