1099 for dummies?

[glyco4all]

Can anyone please either recommend a resource, or list step by step, what things you need to do to set yourself up as a 1099 IC?

I'm leaving a PP job soon and need to get on this asap. I've been spoiled by all of the business end of things being handled for me for last 20 years.

Thank you so much!!

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[aneftp]

For once I will refrain from my own personal opinion on my 1099 ideology and how to maximize taxes.

But this is a good beginning site to learn

1099 Physician Financial Planning | White Coat Investor

Being in business for yourself is exciting and empowering, but does come with taking care of a few things on your own that your employer used to take care of for you. But if you work through this list, you'll be up to speed with those of us who have been self-employed for a long time.

www.whitecoatinvestor.com

 

[TeslaCoil]

Can anyone please either recommend a resource, or list step by step, what things you need to do to set yourself up as a 1099 IC?

I'm leaving a PP job soon and need to get on this asap. I've been spoiled by all of the business end of things being handled for me for last 20 years.

Thank you so much!!

Disclaimer: I am not a CPA and this is unofficial advice. Best resource you could hope for is a good CPA, but often you have to pry it out of them. If you're going to go 1099 the best structure is to create an LLC and make yourself a business. Then depending on how much money you make you may want to consider filing taxes as an S-corp. This way you save the extra taxes you'd be paying as a sole proprietor/independent contractor, and also any excess payroll taxes as well. If you do that though, you need a business bank account and accounting software to be able to account for all your income and expenses. I use quickbooks online. There is a learning curve, but it can save you a ton. You can even hire employees (like your kids or your wife) to shift your income to them that way the income is in a lower tax bracket. Granted they have to be doing something legitimate for your business. Additionally, all your business expenses, CME, business travel, equipment and automobile expenses etc are all tax deductible. This is the big picture of how this goes but you will need to figure out the details of all of it on your own and use a CPA to help you structure your life.

 

[so55b]

Any advice for someone who is considering 1099 anesthesia locum jobs on top of W2 full time job?

Let's say I make 100-150k more from 1099 locum a year. Not sure it is worth the hassle. Or it is better working harder with my current W2 job and increase income which is very possible. I thought it would help to increase my retirement savings as I can open another 401k or something with my 1099 job and also can spend more on CME and also some advantage with expenses. Didn't know if I could hire my family as my employee which would be nice too.

 

[TeslaCoil]

Any advice for someone who is considering 1099 anesthesia locum jobs on top of W2 full time job?

Let's say I make 100-150k more from 1099 locum a year. Not sure it is worth the hassle. Or it is better working harder with my current W2 job and increase income which is very possible. I thought it would help to increase my retirement savings as I can open another 401k or something with my 1099 job and also can spend more on CME and also some advantage with expenses. Didn't know if I could hire my family as my employee which would be nice too.

Less benefit for you, to be honest but you would be saving something. Just not sure it would be worth all the hassle. Keep in mind that there are cost involved in maintaining your own LLC. May not make sense for you. But again you need to find a good experienced CPA.

 

[sloh]

Less benefit for you, to be honest but you would be saving something. Just not sure it would be worth all the hassle. Keep in mind that there are cost involved in maintaining your own LLC. May not make sense for you. But again you need to find a good experienced CPA.

What income threshold would you say it starts making sense to have an LLC or S-corp where the extra hassle and time are worth the ROI?

 

[TeslaCoil]

For physicians who are entirely 1099'ers it will almost always make sense unless you are part time. The break even point is at a net income (or profit) of 50k or more. So if you're making anything more than 50k after your expenses are paid (including operating expenses and payroll etc.) then you would be saving something. BUT because of the effort it takes to maintain all of this structure I would say the cost/benefit places the threshold quite a bit higher for it to be worth it. That number just depends how much of a penny pincher you are. You're looking at about a 15% saving in payroll taxes on any income greater than that break even point. That is my understanding.

 

[Direct Laryngoscopy]

Choose to incorporate in a state that is small business friendly and aligns with your goals and code. For me, all of my LLCs are incorporated in Wyoming

 

[aneftp]

Accounting fees payroll taxes can range anywhere between $0 (if you do it urself) and $1500 per year as S corp

Unemployment taxes varies by state

California has a pretty nasty S corp tax

So running any s corp generally sets you back around $1500-2000 for 90% of people.

Can this initial $2000 cost be overcome easily?

For anesthesiologists who are solo and can’t put anyone else on their payroll plus have significant w2 income (from employer). The answer is you generally do not need to do an s corp and just file as single member LLC/sole proprietor

Now if you can put your non working spouse on the payroll/college age kids and maximize s corp benefits, it’s probably worth it to do s corp

If your only income is all 1099. Than definitely do s corp.

This is my experience being in and out of s corp and single member LLC the past 20 plus years.

 

[TeslaCoil]

^this. I am a full time 1099'er and I work for 2 organizations both of which pay me on a 1099 basis. I have 3 employees besides myself so it makes ALL the sense

 

[linkin06]

I did it through a lawyer and accountant this year starting up. I didn’t want to mess it up. Set me back a 2-3 thousand but can deduct it. Maintenance in future years if it looks easy I will handle.