by Doreen Martel

Created on: February 07, 2011   Last Updated: March 24, 2011

The Natural Resources Defense Council defines telecommuting as "working with others via telecommunications technologies (e.g., telephones, modems, faxes) without physically traveling to an office." Home business interests are growing according to the SBA.  Many do not realize that companies like Apple Computer, Mary Kay and Ford Motor company all started as

home based businesses.  For those who are considering working from home, comparing a home business and a telecommuting job may seem like an exercise in futility, but it is a necessary step to understanding the significant differences between the two.

Home business versus telecommuting job

One of the primary differences between these two roles is the classification of the person doing the work.  Home business owners are classified in one of two ways, as an entrepreneur or as an independent contractor. These terms may be used interchangeably.  Those who are participating in a telecommuting job are employees. These classifications are important for tax purposes which will be discussed further.

Business versus telecommuting responsibilities

Those who have elected to start a home business will be responsible for their computer equipment, internet connections and to have the software that is necessary to make their business a success. Depending on the company, those who are offered telecommuting options may be provided with the needed equipment, software and Internet connections through their company.

Telecommuters work is directed by their company whether the role is that of a customer support agent or a sales person.  When a person starts a home business, they take on the role of determining the direction of their business. The entrepreneur may handle all aspects of obtaining work, marketing and business forecasting on their own or they may hire outside consultants to assist them.

Home business versus telecommuting financial considerations

When running a home business, the entrepreneur is taking on considerable financial risk.  Income is dependent on the actions of the entrepreneur, tax liabilities need to be dealt with, insurance must be paid and retirement income must be saved.  When telecommuting, these are handled by a company including medical benefits, social security taxes and payroll taxes. Those who have a telecommuting role are typically paid via W-2 income and receive a paycheck directly from the company. Running a home business means that without sales, there may be no income.

Home business versus telecommuting flexibility

Home based business owners are free to make their own schedule depending on their financial goals and what works best for them.  Telecommuting roles often mean that the company sets the hours of the employee.  This of course does depend on what type of telecommuting position has been undertaken. The balance of control shifts from the worker being in control of a home business while an employer is in control for a telecommuting position.

Summary

There are distinct differences between telecommuting and home business opportunities.  Those who prefer to manage their work time, manage their earnings potential and are willing to take risks may find that a home business is a good solution for them. For those who need the dependability of a regular paycheck, prefer to work with some supervision and are adverse to all but minor risk may be better off with a telecommuting position. Comparing a home business and a telecommuting job is something that must be done taking all aspects of both opportunities into consideration.

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