Part 1: Independent Contractor (Solo Practice) vs Employee
What is Locum Tenens?
Locum Tenens is defined as a person who temporarily fills the role of another, and this is most common in the medical field such as physicians (MD), physician assistants (PA), nurses (RN), advanced nurses (DNAP & CRNA) and other medical specialists (PT, OT, SLP). The flexibility in schedule, autonomy, higher pay, work-life balance, and travel experiences make this a popular choice of the people from the medical community. Locum tenens has also provided major support to the healthcare facilities by filling in the workforce gap and ensuring quality care to patients.
Locum tenens has many advantages and if you are new or considering starting your own solo private practice (independent contractor), then you need to be aware of the changes in the reporting requirement from being an employee to an independent contractor.
Depending on your preferred business structure, locum tenens may treat their income as an independent contractor reporting with a 1099-NEC form or as an employee using the standard W2 form. The IRS (Internal Revenue Service) specifically states that if you are an independent contractor, then you are self-employed. And without an employer to deduct taxes from your paychecks, you are now responsible for paying your income taxes on a quarterly basis as opposed to the yearly tax filing if you are an employee. These quarterly payments also include payments for Social Security and Medicare taxes. If you fail to pay these estimated taxes during the year, then you will have to pay the government an extra 2% as penalty charge.
However, you will not be taxed based on your gross income since being an independent contractor also means that you are now allowed to deduct specific business-related expenses. Some of these ordinary and necessary expenses for your trade or profession are the following:
- Business Formation
- Home Office
- Continuing education
- Cell Phones, Internet
- Online Bookkeeping, Tax Services, 1099 Accountant Services
These tax deductions will be discussed in more detail in the next issue of this (3) Three-Part Series!
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.
Contact us toll-free (855)529-1099 or make an appointment for a free consultation. https://1099accountant.com/contact/