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Full time as W-2 and part time as 1099?

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Hi everybody, 

I currently work in EM and make flat rate of $80/hr in California. I am looking for a part time job and I just interviewed at one today for an urgent care. The UC wants to hire me as an independent contractor at a rate of $70/hr, however, they said I have to get incorporated and get an EIN which is all foreign to me. I've been doing research on all this and it seem's like it's going to cost anywhere from $500 - $1000 or even more. Seems like a costly endeavor for a part time job and I'm not sure if it's even worth it. 

Pros: 
- It's urgent care so there won't be much of a learning curve 
- So far it's the closest part time position I've been able to find (30 minute drive, my ED job is a 8 minute drive. I would work my ED job more if they allowed it but we're fully staffed at the moment)
- Seems extremely flexible with scheduling which is a plus because my ED schedule is sporadic
- I can write off things for tax purposes...? 

Cons:
- seems like alot of work and costly for a part time position
- I've read that independent contractors are taxed more 
- you can't write off as many things as you could in the past (from what my colleague said)
- $70/hr seems low for a 1099

 

Other questions: Do I really need to get incorporated? Can't I just get the EIN from the IRS and start working? 

Overall, I'm getting a feeling of this isn't worth it. What do you guys think?

paging @Boatswain2PA 

 

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No need to incorporate as it will provide you with no liability protection.  And no need for EIN as you can pay quarterly taxes with your SS#.

ICs pay the full 15.4% of Medicare, where as W2 your employee pays half of that.  However that is only on the first $135k, so if you make that in your W2 job then you wont pay any of that on your 1099 job.  

Yes, you can write off businesses expenses, CME, etc.  It can be good way to get vacations as tax write-offs.

Yes, Trump reduced some write-offs, such as now only write off 50% of travel meals,  but on other hand he GREATLY reduced the tax rate for ICs.  I saved >$15K on taxes last year because of his tax cuts, it was awesome!  (But then took a W2 job, sigh!).

Overall doesnt really seem like a good deal to me.  Why not just pick up some extra shifts and get overtime at $120/hr?

 

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16 minutes ago, Boatswain2PA said:

No need to incorporate as it will provide you with no liability protection.  And no need for EIN as you can pay quarterly taxes with your SS#.

ICs pay the full 15.4% of Medicare, where as W2 your employee pays half of that.  However that is only on the first $135k, so if you make that in your W2 job then you wont pay any of that on your 1099 job.  

Yes, you can write off businesses expenses, CME, etc.  It can be good way to get vacations as tax write-offs.

Yes, Trump reduced some write-offs, such as now only write off 50% of travel meals,  but on other hand he GREATLY reduced the tax rate for ICs.  I saved >$15K on taxes last year because of his tax cuts, it was awesome!  (But then took a W2 job, sigh!).

Overall doesnt really seem like a good deal to me.  Why not just pick up some extra shifts and get overtime at $120/hr?

 

Well I called the HR and the lady said I need to be Incorporated and get a EIN because this UC only pays their ICs via the IC's corporation. I doubt the Doc is gonna make an exception for me. So legalzoom said they can do professional corp and EIN for $630 and then the annual california corp fee of $800/year. 

I do make more 135k/year so that's nice to know however I can't really think of anything I would be writing off. How can I write off a vacation as a tax write off for a part time UC job? 

Trump reducing the tax rate for ICs does sound inviting but Idk how much it impacts my situation since I'm only part time. 

I would love to pick up extra shifts because youre right, OT is 120/hr, but we're fully staffed at the moment. I'm working like 140 hours a month. I don't need the money that badly, but I have way too much free time that I'm wasting. 

Would it be better to take a $65/hr job as a W2 at this rate? Only real perk of this UC job seems to be the flexibility. The doc made it seem like I could work whenever I want as short notice as I want etc. 

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In my state it takes $100 and the Secretary of State grants you an LLC.  That is what I did when I got bad information and initially set up a medical LLC when I started locums work.  That is all the state required, and of course an annual fee to keep it on the books.

Then I found a good attorney.  I mean a GOOD one.  I think attorneys are like NPs...there are tons of them around, they have a license to practice, but most of them have no clue what they are doing beyond superficial advice.  My attorney has argued before SCOTUS, and several times before the state supreme court, as has most of the people in her practice.  When I talked to her about my LLCs (I had the one for my medical business and have one for my real estate business) she sent me to two of her partners who schooled me.

First, the protection that I thought my real estate LLC was giving me wouldn't work simply because I had an LLC, even with the LLC owning the properties.  While I "legally" had a LLC, I needed to have "articles of incorporation" done correctly which I didn't have.  This is what LegalZoom is offering you for that price.  I worked with my attorney to create these articles so I was best protected.

Then I talked to her partner who specializes in medical malpractice who told me that no matter how I structured my medical LLC it would never give me any medical liability protection because malpractice lawsuits are always PERSONAL, not business related.  If you are sued, they would sue your LLC, AND you personally.  Once they got disclosure and found that your LLC had no assets (because it is a pass through entity) they would drop the LLC and keep you as a defendant.  

We did talk about how to protect assets from liability suits, something everyone should understand as you build wealth, but that's another topic.

If you really wanted this job (it seems the HR department is full of low-IQ bureaucrats),  I would simply create a shell LLC with the state of CA.  Looks like it costs $70 to create an LLC in California.  https://bpd.cdn.sos.ca.gov/llc/forms/llc-1.pdf.  Notice it says the "operating agreement is not filed" and is retained by the LLC.  I assume these are the same as the "articles of incorporation" which I never had for my medical LLC.    

Then go to the federal IRS website and create an EIN for your LLC (https://tax-id-online.com/get-started?msclkid=108f05c57d1e17e7a7ef589d3872097a  ).  Looks like you can do this as a sole proprietor as well which might allow you to get an EIN without paying the $70/year for your LLC.   

Voila, you meet the stupid requirements for the idiots in HR.

Regarding vacations - As an IC you can write off business travel.  Want to go to Jamaica?  Northwest Seminars has "Topics in Emergency Medicine" seminars there.  You can likely write off your plane tickets, passport, hotel stay, 1/2 your food, etc.  Everything must be reasonable, and if audited the IRS will look at if you could have taken a similar educational course closer.  But I know that with my ED schedule I am often limited to when I can take time off for CME.  Check with your accountant for more information....

If I were in your shoes I would take the $70/hr as a 1099 (as long as they are also paying for malpractice with tail) versus $65/hr as W2.  I doubt as a PRN you would be collecting much PTO, although if you would that may tip the scale a bit.  You are already maxing out your FICA tax (it maxes out at $132,900) withholding with your primary job, so I see nothing you would get for that $5/hr pay cut as a W-2 unless they offer some benefits to their PRN W-2 employees you haven't disclosed (PTO, retirement match, CME, etc).

Disclaimer: Not an attorney, not legal advice, just some dude on the internet with zero understanding of the crazy tax/bureaucratical schemes of the state of California.

Edited by Boatswain2PA

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If you are. Private contractor you ABSOLUTELY NEED TO INCORPORATE!  Get a lawyer/ CPA as your first step. As a pvt contractor you should no accept anything less than $200 per hour I would guess.  I was a contractor back in the 90s and was getting $100 per hour then. The reason they want you as a contractor is so they don’t have to pay all the taxes etc. They want you to pay them.  I would walk, no make that run away as fast as you can. 

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Why would an IC need to incorporate?

If you are indeed making $200/hr, then I would indeed incorporate because then I would hire myself AND wife (as W-2 employees) and offer huge retirement matching, thus able to put a hundred grand a year into retirement pretax.  Plus you could, after paying yourself an "average wage" of about $80k, give yourself the rest as dividends and pay much less taxes.

But I dont know of any PAs making much over $100/hr, let alone $200/hr, so doubt any of us could afford to employ our wife, so all that is a moot point.

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20 hours ago, Boatswain2PA said:



We did talk about how to protect assets from liability suits, something everyone should understand as you build wealth, but that's another topic.
 

I would LOVE to hear what they told you about this topic.  Seriously.  In Texas we just dump everything into our house as it is 100% protected from lawsuits.  Also, annuities are excluded from lawsuits out here as well.  In considering a move to a place like Cal or AZ I have serious concerns about asset protection short of just putting everything in my wife's name.

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I know it varies state to state.  My state is house and 160 acres.  401Ks are protected, but NOT IRAs (which sucks because I was an IC for years dumping money into my SEP-IRA).  Other states vary considerably, I know there is a pretty good website that details those things but I'm working on my phone right now.

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