Independent Contractor

[Jason09]

What are you alls thoughts on being an independent contractor? I will get malpractice coverage for sure and maybe a health insurance option. I know tax rates are higher, but I can also write off more too. I was wondering if there were any really good tax write offs or ways to offset the higher tax bracket that you all knew of. I know I will get this so I will go ahead and state that I will have an accountant helping me with my taxes. Just wanted some first hand experiences.

[burnpac]

This is a complex problem, and in most situations, PAs don't meet the IRS requirements of the definition of an "independent contractor". This doesn't stop employers from wanting to treat you as such and avoid paying employer side state and federal taxes. Unless they pay a significant amount above your present compensation, your are getting screwed. Trust me. Employers want the total costs of employing you to be less, not more than what they are paying to employ you now, and the want to avoid all the rules on meals, breaks, etc. You give up all of that as an IC.

 

When I started my staffing company in 2005, I researched hiring PAs as ICs. At the advice of my attorney and CPA, we opted against this as all the risk is on the employer side, and there isn't enough money in the world to fight the Department of Labor. If the employer wants the run the risk of double back taxes as a fine, there is little or no risk to you other than not getting treated well under the rules of employees, benefits, employer contributions to Medicare,unemployment insurance, retirement, etc. There are substantial tax write offs, but you have to look at this carefully on a pro and con basis. They may not be enough to justify.

 

That said, I started my own California PA corporation, and opted to work for the corporation, and lease my services to physicians and organizations. This gives me all the benefits of of being an IC, without the risk to myself or the folks that contract with me. Because I contract with two practices, and independently bill first assist, I likely meet the test. I pay myself a salary, and pay all employer side taxes from my corporation. I'm very happy with my situation now, and feel it is a good option for PAs to pursue to gain more control over their work situation and to provide more freedom.

 

However, my attorney explained that if I only had one contract with one practice, even though we contracted corporation to corporation, it might run afoul of the IRS rules and be intepreted as not meeting the test.

 

My advice to you is to have a labor attorney look at you business plan to comment on it. Again, the risk is all on the employer side.

 

Good luck to you and let me know how it goes.

[Jason09]

Thank you for the response. Basically I figured I would most likely end up losing some but the offer is better for me and allows me to grow. Hopefully I can minimize the higher taxes as much as possible with some right offs and what not

[burnpac]

Thank you for the response. Basically I figured I would most likely end up losing some but the offer is better for me and allows me to grow. Hopefully I can minimize the higher taxes as much as possible with some right offs and what not

 

Here is the deal. I like your thinking, and you sometimes need to do something inovative and a little risky to move your career forward. Being in business for yourself is a good thing. I happened to be in a good situation in 2005, with supportive physicians, and I was able to make the leap to a corporation. It was the best thing that I ever did for my career and future.