Will this work?

If I use internet home based business as a keyword will home based business also be counted as a keyword?

 

Yes, that is correct.

I would recommend that you vary your anchors for inbound links. Use "home based business", "internet business", "internet home based business" and "home based internet business" and "home business" for example

 

Yes, it will.

 

Any reason why not focus on that particular keyword to good ranking 1st ?

 

To focus on one keyword is good, but make a bit variation in the anchor text to make Google believe that the linking is natural is always good.