Uncertainties and economic challenges brought by the pandemic have increased the demand for independent contractors and have enhanced the growth of the gig economy. Individuals learned to embrace various forms of self-employment and business ownership as they navigate on the new normal, find flexibility, autonomy, and work-life balance. Join us in this blog as we define the different entities that come to mind when it comes to these modern work arrangements.
Independent Contractor. The Internal Revenue Service (IRS) defines independent contractors as individuals that are self-employed. They work on a contractual basis for clients or businesses. They may even work with multiple clients simultaneously, but they are not considered as employees. The employer-employee relationship does not exist when you are an independent contractor. Unlike employees, the independent contractors maintain control over their work schedule, supplies, and procedures on how to complete the required output. Their earnings are subject to self-employment taxes. They are responsible for remitting their taxes to the government as they have no employers to withhold taxes for them. Independent contractors are commonly engaged in providing specialized services such as consulting, medical services, accounting, design, or IT support.
Locum Tenens. Locum tenens is defined as a person who temporarily fills the role of another. In the medical community, locum tenens professionals are substitute practitioners providing medical services in the absence of regular staff such as physicians (MD), physician assistants (PA), nurses (RN), advanced nurses (NP & CRNA) and other medical specialists (PT, OT, SLP). They have provided major support to the healthcare facilities by ensuring quality care to patients and filling in the workforce gap caused by vacations, maternity leaves, or unexpected leaves. Locum tenens has become a popular choice in the medical community as it offers flexibility, autonomy, higher earnings, opportunities, and vast experiences given its nature of working with different health facilities or environment. Depending on their selected business structure, locum tenens may be an independent contractor or an employee of their one-person company.
Solopreneur. A combination of the words “solo” and “entrepreneur”, solopreneurs are individuals who start and manage all aspects of their business single-handedly. They are solely responsible for operating their business and delivering their products and services. They do not hire employees but may temporarily work with freelancers or independent contractors. Though solopreneur may be similar to an independent contractor who enjoys flexibility, autonomy, and freedom to pursue their passion, they are slightly different since solopreneurs commonly operate a properly registered business. Simply stated, solopreneurs are business owners who runs solo.
One-Person Company. A one-person company on the other hand is like a solopreneur where it is run and operated by a single individual but requires more legalities and has liability protection for the owner. The IRS refers to them as Single-Member LLC (Limited Liability Company). A one-person company is required to register their business and has a separate legal entity from its business owner. The owner’s assets are protected in case of a legal pursuit against the company. In addition, if the owner elects to be an S Corporation, he will be able to save on self-employment taxes by becoming a W2 employee of its own company.
Overall, understanding the differences between these new normal work arrangements is essential for individuals to have informed decisions about their career paths or business ventures as these entities have different legal implications and tax obligations. Whichever path you choose, self-employment or running your own business can offer flexibility, independence, and opportunities in this evolving economic environment. We at 1099 Accountant are dedicated to empowering individuals and to help them thrive in their respective business endeavors by providing our expert financial and advisory services on Accounting, Taxes, and Retirement Plans.
Want to learn more?
You may want to consult and work with 1099 Accountant – We offer online bookkeeping, online advisory services and online tax and accounting services. We offer reasonable rates. We only work with independent contractors, freelancers, and one-person business. We work with locum tenens from California to New York City and everywhere in between. Yes, even Hawaii!
Contact us toll-free (855)529-1099 or make an appointment for a free consultation. https://1099accountant.com/contact/
