The difference between a consultant and an employee impacts how you or an employer is taxed, and how many people you can work for at once. It's not a parsing of words to designate specifically that you're one or the other in a contract, or when you get hired. As a work-at-home mom, your goal should be to work as a consultant, and not as an employee. Once you understand the difference between the two, you'll understand why.
W-2 or Form 1099
A consultant and an employee receive different tax forms in most cases. Employees get a W-2 listing the wages earned during the tax year, and the various tax withholdings. An employer is required by law to withhold taxes and pay them to the Internal Revenue Service (IRS) and the state government, such as the income tax, social security and medicare.
Most consultants receive Form 1099, which states your earnings during the tax year. There are no withholdings, which means you're responsible for paying your own taxes. The IRS and you will get copies of Form 1099, if you make above a certain amount that's determined by the IRS for different tax years. The exception to this, is when an employer hires you as a consultant to work as a temporary employee. As a consultant, you have the freedom to manage your money as you see fit without an employer taking it out of your paycheck first. You have to be responsible in planning for your taxes though, because you don't want to owe taxes that you can't pay before the tax deadlines.
Limits on Who You Work For
You can work with many different individuals, business owners and families when you're a consultant. An employee working at home has to work with one employer. It's not practical to try to take on more than one, if you also have to balance work and home life, while you're at home. As an employee, you're guaranteed to work and be available for a certain amount of hours at home (that you won't have interruptions by dependents or anyone else). For many work-at-home moms, that means waking up early or staying up late to get work done. If you work for an employer, you'll have to dedicate the time you have to work for them exclusively. If you only work part-time, then maybe you could take on a second employer. It would be better to work as a consultant though, so that you have more control in the working relationship, and can end relationships with certain clients when needed.
The law presumes that you work for an employer, unless your contract states otherwise. That's why a written contract is key to define whether you are a consultant or an employee. Look for that language in a contract before you sign. If you use your own contract as a consultant, make sure there's language in there that specifies that you're working as a independent contractor consultant.