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Self-employed individuals that work for a legitimate company are either contracted as an independent contractor (IC) or hired as an employee. There are benefits and disadvantages to both depending on your perspective.
As an independent contractor, you stand to make more money on average because you are not bound by the 40 hour maximum per week regulation as employees are. One of the disadvantages is that IC’s are paid per project or actual minutes worked instead of per hour. This can cause them to lose money if they receive a low volume of work for that pay period.
Here are other key aspects of working from home as an IC:
- Contracted for your services
- Set your own schedule
- Taxes are not taken out of your paychecks
- File 1099’s each year
- Supply all the equipment necessary
- Does not have to wait 2 weeks for 1st paycheck
- Does not receive pay stubs
- Earnings are not reported to the IRS
As an employee, you are paid by the hour. So even if the volume of work is low for that pay period you will not lose any money. The disadvantage to that is not being able to make more than a certain amount each week unless overtime hours are granted.
Here are other key aspects of working from home as an employee:
- Hired to work
- Chooses from a set schedule
- Taxes are taken out of each paycheck
- File W2’s each year
- May or may not have to supply the equipment necessary
- Wait 2 weeks for 1st paycheck
- Receive pay stubs
- Earnings are reported to the IRS
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