We always tell people, "Never pay for a job." It's good advice -- you'll hear it often in online work-at-home discussion forums -- but there are a few exceptions. If you're unaware of them, you’ll 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. Here, agents may sometimes be required to pay for training, or set up a limited liability company or corporation at their own expense before starting work. These exceptions come from IRS rules and how they're interpreted, and while we’re not lawyers or accountants and can't offer advice on these issues, maybe we can at least put them in context.
 
Some virtual call centers -- legitimate companies such as Arise, VIPdesk, LiveOps and others -- hire agents as independent contractors instead of full- or part-time employees. Because of the IRS rules governing independent-contractor relationships, these call centers -- with some variations depending on how the company interprets the IRS rules -- require applicants to pay for certain things or meet other conditions before assuming work.

For the IRS, "Independent" Means Independent
 A key point to remember: The IRS has its own definition of "independent contractor status" (see the IRS links below for more). Companies who hire independent contractors must meet that definition.

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 call center 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. Call centers apply this concept with varying strictness, and most likely on the advice of their lawyers or accountants.

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

Other call centers, such as LiveOps, will hire an agent 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 or accountant before choosing the one that works 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 may include:

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

To compare call center wages, whether training is paid, the status of agents, etc., see our chart at http://www.ratracerebellion.com/CS_Comparison.html.

Here are some additional links for further research.

• 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
• For the Wikipedia entry on Limited Liability Companies, see http://en.wikipedia.org/wiki/Limited_liability_company  
• For the Wikipedia entry on Sole Proprietorships, see http://en.wikipedia.org/wiki/Sole_proprietorship

Do your research and networking diligently. With the steady expansion of the virtual call center field, sooner or later you'll find a match.

Copyright 2008 Durst and Haaren.