Work From Home Job or Home-Based Business?

In this article, we are going to look at the difference between a work from home job and a home-based business. To help us illustrate the difference, we are going to create a fictitious fast food chain, Hamburger Heaven, and pretend that this national fast food chain is on every major street corner so that you can get a visual image of what I’m talking about.

If you wanted to go get a job at Hamburger Heaven, you would expect certain things. For example, you would expect:

That Hamburger Heaven would ask you for the hours you were available to work before they hired you.
That they would develop a work schedule for you based on your available hours and expect you to work those hours with minimal disruption.
That they would explain your compensation before you were hired, and that you would be paid this compensation on a regular and consistent basis.
That you would be entitled to this compensation for all hours worked, even if Hamburger Heaven had no customers during the time you worked.
That if your schedule was considered full-time, that you would be entitled to additional compensation such as paid vacation, access to health insurance, and sick pay.
That you would be an employee of Hamburger Heaven, and that they would be responsible for making your federal and state withholding payments and unemployment insurance, etc.
You would not expect to be charged to be hired or trained by the company. In fact, if training is required for the job, you should expect them to compensate you for the time you spend in training. There might be legitimate expenses involved in taking the job, for example, you might be required to wear shoes with non-slip soles, which would be your responsibility to purchase. The company might provide you with a list of vendors that sold such shoes, or they might have an arrangement with a vendor where you could order the shoes and have them deducted from your future payrolls.
A work from home job should not be any different. It is still a job – the only difference is the commute is much shorter. Your prospective employer should still provide you with a work schedule based around your availability, and expect you to work your schedule. They should still provide you with a stated compensation package and pay you on a consistent and regular schedule. If you are expected to be “on call” during certain hours, you should be compensated for those hours even if no calls are received. If you are scheduled for full-time (usually over 35 hours a week) of work, you should discuss benefits that would be available to you in a regular job. And since you are their employee, you should expect to fill out a W-4, have withholdings taken out of your paycheck, and be provided with unemployment insurance and, if applicable, workman’s compensation insurance. And you should not expect an employer to charge you a placement fee or a fee for training; you should be paid for necessary training. If the charge is for necessary equipment or supplies, consider this in light of the Hamburger Heaven example above, and see if it would fly in a regular job environment.

How about a home-based business? How does that differ? Well, let’s return to our Hamburger Heaven example. If you wanted to open your own Hamburger Heaven, it would be quite a bit different than getting a job there. You would either go to the Hamburger Heaven corporate office and purchase a franchise license, and then go about setting up your own restaurant from scratch using their guidelines, or you might find someone selling their already open and running Hamburger Heaven restaurant, and purchase that (called a turn-key business). Either way, there is likely to be some money required to get started (capital). While you would have Hamburger Heaven to help train and guide you, there would be no guarantee of success. You would be exposed to some risk. You might not make money right away, or even on a regular basis. You would be responsible for many of the day-to-day decisions, although with a franchise, there might be some decisions you had no control over. For example, you would have to decide how many employees you needed, who to hire, and when to schedule them. But Hamburger Heaven’s franchise agreement would require that you use their uniforms, signage, interior décor, menu, and prices, so you would not have control over these decisions. Because you are self employed, you are responsible for self-employment tax. You are also responsible for making sure your employees’ taxes and fees are paid (on time) and for carrying whatever licenses and insurance is required to operate your business.

A home-based business works much the same way. You will likely have to put out at least some money. If you become an independent consultant, affiliate, or franchiser for a company, you will have the support and training of that company to help you get started, but that is not a guarantee of success, or even of an income. There is likely to be some risk involved. You are the boss, which means you will be responsible for many decisions. As an affiliate or franchiser, there may be rules you have to agree to with the company you align yourself with; this is something you want to consider before signing up under them. And regardless of whether you start your own business, buy a turn-key business, become a consultant, affiliate, or franchiser, you are self-employed, and responsible for your own (and any employees’) taxes, insurance, licenses, and fees.

Now, that makes it sound like I am against home-based businesses. On the contrary! I own one myself! There are many benefits to owning your own business. For example, there is no limit to the income you can earn with your own business. Once you start a business and it takes off, your income quite often multiplies itself with the work others in your organization do or products you sell when you are not working (called residual income). With a job, your income is limited to the hours you work, and there are only so many hours in the week.

With a business, you set your own schedule and adjust it on the fly to accommodate your son’s ball game or your daughter’s ballet recital. Try that with a job, even a work from home job, and you’ll soon find yourself unemployed.

I just want to be sure you understand the distinction because being an entrepreneur is not for everyone. If you start searching for a work from home job and end up with a home-based business, you could be very unhappy. And if you are a free-spirit who hates working for someone else and wants to be in control of your own destiny, you will be just as unhappy with a work from home job as you are with a regular job. Once you understand the differences and can look at the advantages and disadvantages of each, you can decide which is right for you and your family, and adjust your search accordingly.

Julia Allen is a work at home mom of six children, ranging in age from 21 down to 4 years. She is a referral agent for MomExecs. To find out more about her business, visit [http://www.homebizmother.com].

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