5 Different Ways to Work From Home

The Pros and Cons of Telecommuting, Contract and Freelance Work, and More

Mid adult woman sitting on floor, leaning on sofa, talking on, using laptop, side view
Ken Wramton / Getty Images

There are many ways to make a living working from home, including work-at-home jobs, contract and freelance work, and creating or buying a home business. While they all offer the chance to avoid a commute, they also have some different pros and cons.

Working for an Employer at Home (Telecommuting)

Many people who decide to work from home initially look for a home-based job with an employer instead of owning a home business. There are several reasons for this, including the desire for employee benefits, concerns about irregular income, or fear of self-employment tax.

One of the most important things to understand about work-at-home jobs is that they are like traditional jobs, and to get them you need to have skills and experience outlined in a great resume.

The good news that many employers are open to telecommuting if you give them a quality work-at-home proposal. Further, many other companies are hiring home-based workers, so if your boss doesn't let you work at home, you might be able to find and get hired by someone else. 

The types of jobs open to working at home are growing too and include work such as customer service, teaching, virtual support, nursing, writing, bookkeeping, and more. 

Pros to Telecommuting
  • Steady income

  • Tax dealt with by employer

  • Health and other benefits in many cases

  • Little to no startup costs (never pay to get hired)

Cons to Telecommuting
  • May not have flexibility (may require set work hours)

  • Reduced or no benefits (not all employers pay benefits) 

  • Possibility of lower pay compared to onsite jobs

  • May still need to arrange child care or care for others

Contract Work

Contract and freelance work are often used interchangeably, but there are a few subtle differences. Many of the home-based "jobs" you'll find on career sites hire workers as contractors instead of employees. These contract jobs can be full or part-time, and as regular as a traditional job, including a steady income. The difference is that contractors are considered independent from the company for tax purposes and therefore, need to manage their own self-employment taxes.

Pros to Contract Work
  • Usually can negotiate fees or rates, with the possibility of a steady income

  • Greater flexibility in when, where, and how you work

  • Increased independence (as long as it gets done to the employers specifications, the employer has less control over how the work is done)

  • Free to begin as long as you have the tools and equipment

Cons to Contract Work
  • Companies can let you go more easily than a regular employee

  • Work may be part-time or less

  • May need to pay estimated taxes and self-employment taxes

  • May be required to sign a non-compete agreement

  • Rarely includes health insurance and other benefits

Freelance Work

In some ways, freelancing is like contract work, in that you're hired by a company to provide a service. In most cases, as a freelancer, you have even more control of your work, such as what you offer and how you do it, than in contract work.

In most cases, freelancers work under their given name, usually as a sole proprietor. However, they can turn their freelance work into a business, offering the same services, but under a business name and different business structure (i.e. limited liability company). 

Like contract work, you can find freelance work on job sites such as Upwork. Or similar to a home business, you can market your services using various marketing tactics such as networking. Common types of freelance work include writing, marketing, accounting, web design, and graphic design.

Pros to Freelance Work
  • Greater flexibility in your schedule

  • Greater control over the type of work you do

  • Ability to set your own fees and rates

  • Free to start as long as you have the tools and equipment

Cons to Freelance Work
  • Work may be irregular, requiring active seeking of work or marketing your services

  • Must pay estimated taxes and self-employment taxes

  • No employee benefits, such as health insurance

Building Your Own Home Business

If you really want to cut the employer cord, or don’t have an area of expertise or desire to be a contract worker or freelancer, you can start a business. Many people are scared off by the complexity of starting a business, but while there are a lot of steps, they can be fairly easy to implement. In fact, you can have a business up and running within a month.

Businesses are usually divided into product-based and service-based. In product-based business, you sell a tangible good, such as gift baskets, craft goods, or an invention you made. However, the internet also provides for the sales of digital goods, as well. A service-based business involves providing a service, such as home cleaning, childcare, or digital design.

Both can be further broken down into business-to-business (B2B) products or services, which provide help to other businesses such as office supplies (products) or bookkeeping (service), and business-to-consumer (B2C), in which you provide help to individuals such as kitchen tools (products) or handyman home repair (services).

Pros to Starting a Home Business
  • Control and flexibility over your time and work

  • Ability to turn a hobby or passion into income

  • In the case of service-based business, they can be fast, easy and affordable to start

  • Set your own prices and pay

Cons to Starting a Home Business
  • Can take time to generate income

  • Income may be irregular

  • Often costs money to start

  • May work longer hours, especially during the start-up phase.

  • Must provide your own benefits

Buying a Home Business

There are four ways to buy a business. 

  1. Buy an existing home business from a home business owner. 
  2. Buy a franchise home business.
  3. Buy a business opportunity.
  4. Buy a direct sales business, which can include multi-level marketing.

In terms of buying a business, one of the best values and potential profitability is direct sales. Unfortunately, there are many myths and misconceptions that prevent some people from considering a home business in direct sales. While there are MLM scams you need to watch out for, you can also avoid them with research.

To be a direct sales success, it's important to pick a company with products you believe in, and also to make sure you have a complete understanding of what's involved. Avoid making common mistakes, such as not reading the contract or not loving the products. 

Pros to Buying a Home Business
  • The product or service already exists

  • There's a ready-made market

  • Marketing plans and materials are created for you

Cons to Buying a Home Business
  • It can be expensive to start out

  • There may be limitations on how and where you can market and build your business

  • It may be difficult to differentiate yourself from your competition