I’m about to launch a website and plan on using blogging as one tool to (slowly) increase my page rankings. I have someone else who will actually be doing the blogging for me and she has just created a wordpress blog at my_domain.wordpress.com.
The way that I was thinking about it would be that I would link to the blog via my site and on the blogs there would be a link back to my site. However, wordpress is not physically on my server. My question is whether it matters whether I upload wordpess to my server in a subdirectory or just have the separate wordpress blog hosted on my_domain.worpdress.com: are there any benefits to going either way?
Installed on your server the blog posts will share the same domain as the rest of your content. Installing WordPress locally also gives you access to far more themes and plugins than are available via wordpress.com
If you do decide to stick with wordpress.com then you might want to consider using your own domain with it instead of just being a part of wordpress.com
Either way having the blog on your own domain looks more professional.