Episode 6: A beginners guide to Independent Contracting or “1099” work.
“I’ve just accepted a 1099 position, but I don’t know whether I should file as a 1040 schedule C, S-Corp, LLC, or Sole Proprietorship?”
“I am working as an Independent Contractor and the IRS fined me for underpayment on my quarterly tax filings. How do I calculate self-employment tax and file my quarterly reports?”
“My clinic hired me in a contract position, but no one told me I wouldn’t have access to health insurance or workers comp”
As healthcare professionals, we have many options when it comes to employment. Many people work in a job where they are employees with benefits, but more and more jobs are now available in healthcare that are contract positions. This trend is not isolated to healthcare, the broader economy has shifted towards “gig” work with a greater emphasis on employment flexibility. When a healthcare professional is offered a contract position, sometimes referred to as a “1099” job, there are risks and benefits that should be considered.
Independent contractors have greater flexibility and autonomy, but may also lose out on valuable employee protections and benefits. There are also tax implications involved with contract work and additional accounting complexities that should prompt every “1099” professional to retain a good accountant for tax navigation.
Another aspect of contract work in the healthcare industry is the legality of the employment arrangement. The IRS sets out specific guidelines that define independent contract status and many employers simply disregard these rules in an effort to save taxes and benefits on their payroll.
Contract work does have many perks. One may be able to write off purchases and expenses in a manner that is not available to traditional employers (e.g. mileage write offs for the commute to the office).
In my own career, a significant portion of my income is derived from contract work. While there are benefits to this arrangement, there was a steep learning curve to develop an organizational system that tracked all the relevant payment and tax information. Within this podcast episode, John and I hope to enlighten and educate our listeners on the basics of independent contracting while also providing resources for those who wish to learn more.
I hope you enjoy episode 6 of WCRT.