The Exceptions to the Rule, "Never Pay for a Job"

We always tell people, "Never pay for a job." It's good advice -- you'll hear it often on the work-at-home discussion boards from the experienced hands -- but there are a few exceptions. If you don't know them, you risk losing legitimate opportunities, and "throwing the baby out with the bath water."

For many people who want to work from home, the most significant exceptions to the "never pay for a job" rule occur in the virtual call center arena. These exceptions involve IRS rules and how they're interpreted, and while I'm not a lawyer or accountant and can't offer advice on these issues, maybe I can at least boil things down a bit.

Some virtual call centers -- legitimate companies like Arise, VIPdesk, LiveOps and others -- hire agents as independent contractors rather than as employees. Because of the IRS rules governing these hirer-worker relationships, this obliges the call center -- with some variations depending on how it interprets the IRS rules -- to require that applicants pay for certain things or meet certain other conditions before assuming work.

For the IRS, "Independent Contractors" Must be Independent (And an LLC Helps Show It)
The key point to remember is that the IRS has its own definition of "independent contractor status" (see the IRS links below for more). As we'll get to in a moment, companies who hire independent contractors must take care to meet that definition in their dealings with their workers.

If they don't -- and the IRS decides that the worker is in fact an employee of the company (regardless of how the company or agent decides to label the relationship) -- the company can get hit with significant back taxes and penalties, which in some cases can even drive it into bankruptcy.

Essentially, the IRS wants "independent contractors" to be treated as truly independent suppliers of labor or expertise. Call centers apply this concept with varying strictness, probably depending in part on the advice of their lawyers or accountants.

Some call centers who hire independent contractors, like Arise, require that you form a limited liability company ("LLC") or similar legal entity before starting work. (The IRS views the LLC as one sign -- among a number that it looks for -- that an independent contractor is truly independent.)

Other call centers, like LiveOps, will hire you on as a sole proprietorship, which can be established at little or no cost. (However, unlike an LLC and other corporations, a sole proprietorship offers no protection against liability. Again, see the links below for more on these "legal entities." Since they carry both legal and tax consequences, you'll want to talk to a lawyer and / or accountant before choosing the one best for you.)

Some companies may require that independent contractors pay for such things as training or credit checks, while others may not. 

Other Questions to Consider Before Signing On
The legal and accounting issues are only some of those you'll want to consider when weighing call center openings. Other questions might include:

-- How much work will I get from the call center after I'm hired?
-- What's the pay scale, and potential for raises and promotions?
-- What are the scheduling options?
-- What kinds of calls will I be handling (e.g., in-bound customer service; out-bound surveys, sales, etc.)?
-- What kinds of clients will I work with?
-- What's the call center’s culture like? Will it be a fit for me?

Do your research and your networking diligently, and -- thanks to the steady expansion in the virtual call center field -- sooner or later you'll find the best match.

-- For the IRS on independent contractors vs. employees, see http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

-- For the IRS on Sole Proprietorships, see: http://www.irs.gov/businesses/small/article/0,,id=98202,00.html

-- For the IRS on Limited Liability Companies, see: http://www.irs.gov/businesses/small/article/0,,id=98277,00.html

-- Wikipedia entry on LLCs: http://en.wikipedia.org/wiki/Limited_liability_company

-- Wikipedia entry on Sole Proprietorships: http://en.wikipedia.org/wiki/Sole_proprietorship

Comments

[amrei]

What are the qualifications required from applicants? Are these positoions available for Filipinos? I am a graduate of 4 year course and have previous experience working with this kind of job. How can i apply? Please answer. Thanks

[Mike Haaren]

Requirements vary by hiring company. You'll want to visit their individual websites (and especially their FAQ pages) for details. (You'll find many sites on our chart at http://www.ratracerebellion.com/CS_Comparison.html .) I've heard that some companies are hiring work-at-home agents in the Philippines (Google searches should produce details), though most hiring is occurring in North America and the UK.