Working from home is no cakewalk, these days. Since outsourcing is in
its full swing, many intricate international laws have come to the
fore, dictating and shaping the future of people, who primarily work
from home. Businesses of all shapes and sizes must stringently abide
by these laws, including taxation laws and laws pertaining to workers’
compensation, protection and insurance. Employees, working from home,
must be made aware of the pros and cons of their professions and the
onus of educating them about all the legal issues is on the
organizations they work for.
This section addresses various legal issues that people, working from
home, essentially face. However, within the limited scope of this
article, it has not been possible for us to put each and every law
under the microscope. It does not matter, whether you are working for
a health BPO or are running your own business that specializes in
insurance analytics. The rules hold true for everyone. Hence, before
you commit to a profession, which involves working from home, you must
make a conscious effort to know all the laws, surrounding your
employment and their legal implications.
If you run your own business, you have to be accountable to the
government, reporting all kinds of income, generated in the process.
Businesses often have to contend with several liability issues, as is
the case with LLCs, with two or more owners. It is mandatory for these
LLCs to file an annual federal tax return form, even if they do not
generate any income. Whether you are running an LLC or a corporation,
each business, no matter which niche market it caters to, has its
unique set of issues, revolving and evolving around taxes. It is
important to seek the advice of a seasoned lawyer or accountant in
order to get a hang of your responsibilities as a business owner. You
can also conduct an independent research for self-education.
W2 employees are distinctly different from 1099 employees. Below is
the summation of the differences between the two:
If you are a W2 employee, working for a business, then, your wages are
taxable. Since every month, taxes are deducted from paycheck, you are
required to report the exact deductions at the end of the year.
Besides unemployment insurance, injury liability and other commonly
applied benefits, W2 employees are also entitled to 401K plans.
1099 employees are primarily contracted by businesses to work on their
assignments. These employees, embodying typical freelance or
contractual work, are required to separately report their earnings for
taxation. These employees are not entitled to any of the benefits,
otherwise, applicable to W2 employees.
Before taking the plunge, you must educate yourself about the legal
responsibilities in terms of taxes and reporting incomes. This
education will definitely come into play, when it comes to running an
independent business or hiring new staff. If you are an employee about
to be hired, it is of utmost importance to double-check with your
employer, whether you are to be hired as a W2 employee or as a 1099