Should I Be An Employee Or An Independent Contractor? Which Option Is Better For The Practitioner Reentering The Workforce After COVID-19?
The COVID-19 pandemic has had a significant effect on the economy and has forced practices to downsize and reduce expenses. In the face of these changes, the question arises from our physician clients: which status is best - an employee or an independent contractor?
Are you an entrepreneur? Do you like to manage people? Do you like to handle finances? Are you the type of person who does not need to predict his/her income or expenses? Are you a business risk-taker? Do you consider yourself a rainmaker? If you answered "yes" to all of these questions, perhaps you should consider being an independent contractor. Being an independent contractor is like having your own private practice in many ways including covering your overhead costs and taking on personal liability.
On the other hand, if you prefer to know how much and when you will be paid, if you like to “disconnect” at the end of the day and be flexible with your work life, if you do not like taking business risks, and if you prefer to leave administrative issues to others, then the employee route may be the best option for you.
The legal distinction between an independent contractor and an employee is an important one. An employee (W-2) works under the control and direction of the employer; whereas, an independent contractor (1099) works independently and has greater control over his/her own time. Worker classification also affects how taxes are paid and by whom, and whether someone is eligible for social security, Medicare and other types of benefits. The IRS distinguishes between the two and uses a three-part test to determine whether a worker should be classified as an employee or independent contractor which has tax consequences. The benefits of an independent contractor versus an employee vary on a case-by-case basis so we highly recommend you discuss the financial and tax benefits with your accountant.
Aside from the financial aspect of deciding whether you should be an employee or independent contractor, your personal desires and goals should also be factored into the decision-making process.
Each of our provider clients are unique. It is important for you to recognize your personal preferences when it comes to deciding whether to be an independent contractor or an employee. We are here to help you and to draft or review your agreements.
For further information, please Contact Us.
Articles distributed by Malecki & Brooks Law Group, LLC are advertisements and summaries for general information and discussion purposes only. They are not full analyses of the matters presented, legal, or otherwise, and may not be relied upon as legal advice.
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