Employee vs Independent contractor

[TWR]

An NP friend in Houston was interviewing for a position and finds out that everyone working for this Dr. is a 1099 including MA's. Are there any rules about being an employee vs LLC or corporation sub chapter S? Isn't it strange that everyone is an LLC at this practice? Can an entire practice be LLC's ?

[AliB]

In my opinion, the doctor is attempting to avoid paying the federal and state related taxes that are the employer's responsibility, including, but not limited to, the more commonly known FICA & Medicare taxes, but also the FUI, SUI, and worker's comp, etc.  

 

It is a violation of the IRS rules for Independent Contractor (see https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined), since I can't imagine any situation in which the physician does NOT control what will be done or how it will be done (or at least a significant portion of it!).  

[BruceBanner]

In my opinion, the doctor is attempting to avoid paying the federal and state related taxes that are the employer's responsibility, including, but not limited to, the more commonly known FICA & Medicare taxes, but also the FUI, SUI, and worker's comp, etc.  

 

It is a violation of the IRS rules for Independent Contractor (see https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined), since I can't imagine any situation in which the physician does NOT control what will be done or how it will be done (or at least a significant portion of it!).  

 

 

That's a very grey area, but technically it is a violation of the definition of an IC.

 

Lots of docs and practices will hire PAs as 1099's. I used to be one. The obvious reason is to save on overhead. Commonly they will offer a competitive W2 salary; say $50-55 an hour, but not pay any benefits whatsoever, and of course leave you with the higher tax burden.

 

If you are going to be a 1099, you need to be making about 30% more than the competitive rate for a W2 to offset the tax burden and the lack of any benefits. When I was a 1099 I saved 35% of every check and paid quarterly taxes.

[AliB]

That's a very grey area, but technically it is a violation of the definition of an IC.

 

Lots of docs and practices will hire PAs as 1099's. I used to be one. The obvious reason is to save on overhead. Commonly they will offer a competitive W2 salary; say $50-55 an hour, but not pay any benefits whatsoever, and of course leave you with the higher tax burden.

 

If you are going to be a 1099, you need to be making about 30% more than the competitive rate for a W2 to offset the tax burden and the lack of any benefits. When I was a 1099 I saved 35% of every check and paid quarterly taxes.

 

 

I agree that a PA or NP can work as a 1099 (or corp to corp), provided the collaboration agreement is appropriately structured ... AND if so permitted by state laws (I suspect!).  But the OP's comment was that EVERYONE in the practice, including MAs, and I infer, receptionist, is being paid as a 1099.  THAT won't fly.  :)