Not all people who work from home are the same. We don’t just mean that they’re in different markets or industries, but there are different legal and logistical work-at-home arrangements which need to be taken into account when planning a home office.
We can identify three basic work-at-home types:
- an individual running a home-based business
- a freelancer/independent contractor or professional
- a part- or full-time telecommuter
The following summarizes the distinctions among the three categories.
- Home-Based Business—A small company that offers products or services to clients. Examples: graphic design companies, accounting firms, business consultancies, or manufacturers of specialty food items.
- Freelancer/Independent Contractor/Professional—An individual who provides professional services to clients, ranging from consulting, to writing, to graphic design, to photography, to public relations, to marketing services, to professional public speaking, to…you name it. Examples: lawyer, accountant, consultant, designer, independent sales representative.
- Telecommuter or Teleworker—An individual who is a full-time employee of a company, but doesn’t own or run the company, and works from home either part time (say, two or three days a week) or full time. The company’s headquarters may be local or located across the country, or even overseas. Examples: company PR representative, IT specialist, or salesperson.
There is some overlap between the first two categories, but the primary difference is that the home-based business tends to be set up as a distinct business entity for tax purposes, while the freelancer/independent contractor/professional typically, but not always, is an individual who reports business income on his or her personal income tax return.
The last category, telecommuter or teleworker, may differ in some significant respects from the first two, especially in terms of tax, insurance, and even some logistical respects (office hours and availability, e.g.). Often, company sales reps fall into the category of teleworker, as their job description requires them to travel and visit clients the majority of the time. Salespeople in different parts of the country from the home office (their territories) may report to a local or regional sales office, or may in fact consider their home (or even their car) their office. And, in fact, an off-site call center may actually be someone’s home office.