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Who is 1099 and who has their own corp?


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Thinking about doing more locums work whilst keeping my FT benefited job and wondering about experiences between being a 1099 and having an LLC/S-corp. Seems like the people who do this FT definitely have their own company, which makes sense, but wondering how the part-timers choose to manage it.

Along those same lines, when lining up a locums or contracting gig, ever had any push back about being paid through your company rather than directly? Does it make any difference to the placement company's bottom line?

For those that do have an LLC/S-corp, at what point did you set one up with regard to how much contract work you were doing? By that I mean, is it worth it if you're only contracting 40 hours a month? At what point is it requisite?

All input welcome...

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As I am currently debating this as well, I spoke with several of the physicians I work with (who are independent contractors while the PAs are employees) and all have said they have looked into it and it is not a significant enough benefit to justify the cost and hassle. Couple of the reasons given: offers no additional tax liability, slightly more complicated accounting and taxes.  Recently discussed this with my accountant and she thought it was useless if making less than $20,000/yr as an IC. Above that, she thought it was a discussion worth having. We'll see.

Do a google search on this and you'll get numerous opinions. White coat investor has a good take on it. If I remember correctly, the summary was to file under yourself, but to possibly have an umbrella policy for other "incidents," Been a bit since I read that post though so I may have forgotten something!

Working as an IC definitely has benefits, particularly in the realm of flexibility of pay, taxes, scope of practice, location and schedule. It's not for everyone though! 

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On 4/7/2018 at 5:20 PM, EMEDPA said:

how would it influence your scope of practice? 

Several of the broader scope of practice jobs I've seen have been independent contractor jobs. Some of the more rural places I've looked into are IC only. Not that there aren't IC jobs in very limited scope urban centers! Leaving a restrictive W2 position to work as an IC at a rural, solo coverage place would definitely increase your scope. 

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On 4/6/2018 at 6:04 PM, narcan said:

wondering about experiences between being a 1099 and having an LLC/S-corp. Seems like the people who do this FT definitely have their own company, which makes sense, but wondering how the part-timers choose to manage it.

There is generally no benefit in having an LLC/S-corp versus a DBA...either way you can get paid via 1099.

I initially set up a LLC/S-corp when I got my first main 1099 contract, but it was on the erroneous advice that I would be better "protected" from lawsuits as an LLC (the ONLY reason to have an LLC....hence the name LIMITED LIABILITY Corporation).  But since all malpractice suits are personal (ie: they would only name the LLC if it held assets), it doesn't matter.  I have since disbanded (that) LLC and simply get my 1099s and report them on taxes without the LLC.  This saves me the time/money/expenses of maintaining (that) LLC.  

Theoretically, with an LLC, you COULD pay yourself a "reasonable" W-2 wage (reasonable would have to be close to the average PA makes in your area), and then pay yourself a "bonus" which is taxed at 25%.  This could be a good idea if you could pay yourself a bonus (at 25% tax rate) instead of paying 32% of everything over $157K taxable (single) or $315K  taxable (married).  Of course, that "taxable" is after deductions, etc.....so probably out of the range of all but the very highest earning PAs.  Furthermore this requires more annual paperwork to maintain the LLC, and the tax scheme is more challenging so costs more to complete.

With very, very, very rare exception it's not worth it to operate as an LLC versus a simple DBS (paid via 1099).

That being said, having side-gigs (real estate, et al) put into an LLC can limit the impact of lawsuits on your PA income.

 

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On 4/7/2018 at 5:20 PM, EMEDPA said:

how would it influence your scope of practice? 

There is no connection between your tax scheme and your scope of practice.  The IRS beancounters who would audit you wouldn't give a rats rectum about what your scope of practice is. 

On 4/11/2018 at 1:40 AM, JMann said:

Several of the broader scope of practice jobs I've seen have been independent contractor jobs. Some of the more rural places I've looked into are IC only. Not that there aren't IC jobs in very limited scope urban centers! Leaving a restrictive W2 position to work as an IC at a rural, solo coverage place would definitely increase your scope.

Association....not causation.

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8 hours ago, Boatswain2PA said:

There is no connection between your tax scheme and your scope of practice.  The IRS beancounters who would audit you wouldn't give a rats rectum about what your scope of practice is. 

Association....not causation.

I agree and I was implying that there could be an association in certain instances. Original poster didn't mention other potential benefits of working as IC, but I was just attempting to point out what some of the possible advantages could be.  

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