Are you an employee, or an independent contractor?

If you are a full-time employee of a company who works at home, you are often categorized as a telecommuter. In this case, you are only working for one company and they pay you a regular paycheck based on tasks and responsibilities that you are required to complete.

On the other side of the equation, you could be an independent contractor working from home. In this case, you are not an employee of any one company. Instead, you have the right to work for many clients – none of which pay you a salary (or benefits).

According to the IRS, the general rule is simple:

“An individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”

Additionally, all earnings as an independent contractor are subject to self-employment tax.

For the past 5+ years, I have worked at home as an independent contractor. Over this period of time, I have completed projects for hundreds of companies – none of which paid me a salary or considered me an employee.

benefits of working as an independent contractor

The primary benefit of being a full-time telecommuting employee is that you know you are receiving a paycheck from the same company on the same day(s) every month. Along with this, you never have to worry about marketing your services in an attempt to find new business.

However, I enjoy life as an independent contractor. Some of the benefits that I currently take advantage of include:

  • The ability to work for many clients at the same time
  • The chance to increase my income by obtaining new clients and/or increasing my rates
  • Not reliant on one company for all my income (great for financial safety
  • No hassle from a given company to work on-site as opposed to at home

Does this mean that being an independent contractor is the right choice for everybody? Of course not. That being said, if your employer does not want you to telecommute but you want to work from home this could be the setup you have been searching for.

Final thought of becoming an independent contractor

When I left the corporate world to become a freelance writer (as an independent contractor) I was worried about everything from tax implications to finding clients.

Here is an important bit of advice: if you cannot do it yourself hire a professional. For example, the first thing I did was find an experienced certified public accountant (CPA). She has been my go-to person for tax advice since day one. Over time, her guidance has saved me a lot of time and money.

In other words, I do what I do best, and what I don’t know I get help with.