How to Tell the Differences Between a Home-Based Business and Home-Based Job
You likely have a home-based business if you decide on the products or services you'll sell, invest your own money and control every aspect of your home-based operation. You have a home-based job if you're a corporate employee, your home-based operation is approved based on a company policy and you earn a regular paycheck in exchange for hours logged or results produced.
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Instructions
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Determine who owns the company that the home-based worker works for. Large companies such as Xerox, Sprint and Aetna have home-based worker programs that eligible employees can apply for. Home-based jobs allow the worker to handle his responsibilities from an approved office space in his home. His job would likely require him to log in for a set number of hours per day, report to a boss and consistently create the results necessary to maintain his home-based status.
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Find out if the home-based worker reports to a headquarters. Home-based business owners may spend everyday working from home. Telecommuters, or "teleworkers" who work home-based jobs may only spend a couple days per week working from home and the rest of the work week at a corporate headquarters or satellite office. See if the home-based worker has a job title and is assigned his duties by a head office, which would put him in the home-based job category. A home-based business is independent and its owner juggles multiple jobs as necessary to run the business.
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See if the worker must invest his own money in his home-based operation. Realize that home-based employees are generally not required to invest their own money in order to work from home. Owners of home-based businesses do have to invest their own money into everything from purchasing office equipment to marketing their products and services. Find out if the home-based worker created a home-based business by purchasing one or more licenses to do business in his county or state.
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Find out if the Internal Revenue Service (IRS) considers the home-based worker to be an employee or an independent contractor. Determine if the home-based worker has the freedom to choose what work he will do and how he will do it for any particular client or customer. According to the IRS, such a person would be a self-employed independent contractor, responsible for making his own tax payments and putting him in the category of home-based business. The worker likely has a home-based job if a company withholds taxes from his earnings or pays for benefits such as health insurance or retirement.
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References
- International Data Corporation; Improving US Economy Drives Growth in Home-Based Businesses, After-Hours Worker and Telecommuter Households, IDC Says; March 2011
- Career Builder; Who Hires Home-Based Workers?; Patrick Erwin; August 2008
- IRS; Independent Contractor Defined; January 2011
- IRS; Independent Contractor (Self-Employed) or Employee?; February 2011
- Photo Credit Thinkstock/Comstock/Getty Images
