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Work at home Contractors versus Employees
Most of us would take any work at home opportunity that came our way, but you may still be interested in knowing the differences between being a work at home employee or a work at home independent contractor. In some cases there may be a compelling reason why you would strongly prefer one or the other. Such cases may include tax-related issues and/or the ability to obtain health insurance.
In general, work at home contactors have far more freedom and independence than their work at home employee counterparts. On the other hand, work at home employees usually receive benefits that contractors don't receive. Only you can decide which situation is best for you. For most people it doesn't matter.
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Work at home Independent Contractors
- Work at home and are usually considered self-employed for legal and tax purposes
- Receive a 1099 at the end of the year from employer
- Are responsible for taking out their own taxes
- May enjoy many tax benefits, including possibly paying less tax and having more tax deductions than employees have
- Work at home generally enjoying more freedom, with the employer only interested in the end result of the work, not how the work is performed
- Often paid based on actual work completed
- Usually free to work at home for more than one company at a time.
- Responsible for their own health insurance and other benefits
- Work at home independently, often free to hire other people to work at home with them
- Usually involves less of an application process.
- Employer usually requires an Independent Contractor's Agreement.
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Work at home Employees
- Work at home and are considered employees for tax purposes
- Receives a W2 form at the end of the year.
- Employer takes out and pays taxes.
- Has minimal tax benefits.
- Work at home with more freedom than office-based workers but generally have less freedom than independent contractors; employer able to control virtually every aspect of the work even though you work at home.
- Paid in a variety of different ways.
- Some employers discourage their employees from working for more than company at a time, even when they work at home
- Some employers pay for some or all of health insurance costs (the trend is that employers are paying less and less of skyrocketing insurance premiums).
- Work at home as dictated by employer, usually not free to hire.
- Usually involves a very rigorous application process and screening.
- Some employers have special contracts for their work at home and some don't.
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