Legal Issues in Working From Home
There are many legal issues surrounding work that takes place in the home. Taxation laws, protection for employees and insurance are just a portion of the many legal issues surrounding work as well as business. It is the responsibility of every business, whether that business earns supplemental or fulltime incomes, to abide by laws surrounding taxation, insurance and employment. Additionally, employees should be aware of the pros and cons surrounding the legal issues of working from home.
Not all relevant information regarding legal issues for businesses will be covered in this section and it is the responsibility of each person and business to follow and be aware of the legal issues surrounding their work and employment.
Your Own Business – Reporting taxes
When running your own business it is your responsibility to report any and all incomes made through your business.
There are several tricky legal issues surrounding the legality of companies including issues surrounding liability. For example, any LLC with two or more owners must file an annual federal tax return form even if there is no income. Each type of business (corporation, LLC, etc.) has its own issues regarding taxes and the legality of your business. It is important to confirm with an attorney, accountant or independently research your legal responsibilities as a business owner even in the case of very little or no income.
W2 Employees vs. 1099 Employees
There are some very distinct differences between W2 and 1099 employees. The following is just a brief look at some of these applicable differences.
W2 – If you work for a business and are a W2 employee, this means the company you work for applies taxes to your wages. Therefore your taxes have already been garnered from your paycheck and at the end of the year you are required to only report which deductions have been made. W2 employees often receive 401K plans from their employers in addition to unemployment insurance, injury liability and other commonly applied benefits.
1009 – 1099 employees are often employees who work under contract for a company. 1099 employees more commonly represent freelance or contract work and as such are required to report their incomes for taxation independently. 1099 employees aren’t protected from unemployment, injury on the job and are not offered any type of 401K programs through their employer.
1099 employees are commonly employees who work on specific projects or for a specific amount of time rather than a fulltime worker who reports to an office daily for years, although there are businesses who employ under 1099 in this way.
It is important as an employee or someone who earns money independently from home to understand where your legal responsibilities lie in terms of taxes and reporting incomes. You should know whether you are being hired as a W2 or 1099 employee, or if you are earning money from your own business how to legally report incomes, hire additional employees and other pressing legal matters for a business.
The United States Small Business Administration offers information for employees and business owners regarding the legalities of business.
IRS – Home page