employee vs. independent contractor

[NYCBlues]

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What is the difference b/t the two?
What are the pros and cons of each?

I'd like to work as an independent contractor, but what are the things i should be aware of?

Thanks in advance for any input.

 

[Ryan_eyeball]

Independent Contractor:
Pro's 1. Income Limitless
2. Freedom to set your own schedule
3. Contract work (length 30 days to 1 year usually).
4. Tax advantages (health insurance, supplies, equipment, car-if you
travel from office to office in one day, not just commuting).

Con's 1. Taxes (set at least 15%-30% aside for taxes). You will pay all of
your taxes for FICA, medicare, and social security.
2. No benefits (you have to provide disability, health, malpractice
insurance on your own). I pay for my disability with after tax money.
3. No paid time off hours/sick hours. No work no pay
4. Typically treated like an employee, but main corp doesn't want to
pay the corporate taxes. See KHE for his work experience.

Those are my top 4 pro's/con's for an IC.

 

[NYCBlues]

Independent Contractor:
Pro's 1. Income Limitless
2. Freedom to set your own schedule
3. Contract work (length 30 days to 1 year usually).
4. Tax advantages (health insurance, supplies, equipment, car-if you
travel from office to office in one day, not just commuting).

Con's 1. Taxes (set at least 15%-30% aside for taxes). You will pay all of
your taxes for FICA, medicare, and social security.
2. No benefits (you have to provide disability, health, malpractice
insurance on your own). I pay for my disability with after tax money.
3. No paid time off hours/sick hours. No work no pay
4. Typically treated like an employee, but main corp doesn't want to
pay the corporate taxes. See KHE for his work experience.

Those are my top 4 pro's/con's for an IC.

1) How do you go about negotiating pay as an IC?

2) Where do you go to obtain your malpractice insurance? Any website you can direct me to?

3) Is it necessary to get an accountant to take care of the taxes for you? If so, where/how can i find one (a good one)?

Sorry for all the q's, I am a newbie in the work force. I appreciate any advice from anyone who has gone down this path.

 

[optsuker]

Virtually all the advantages of being classified an I. C. are on the employer's side. They pay less taxes (savings won't be passed on to you), less paperwork, easier to fire you, and fewer benefits to pay for.

If scrutinized by the IRS, almost all IC OD's would fail the determination test (IRS Form SS-8).

If you are hired as a IC, you should be able to determine your own hours, use all your own equipment.

A local insurance agent can quote liability ins. or go through your state association/look on-line.

Find a accountant to help get set up, one with experience with medical professions and Quickbooks will help. You can do most bookwork yourself after that. You may need to pay taxes quarterly.

 

[362.04]

What is the difference b/t the two?
What are the pros and cons of each?

I'd like to work as an independent contractor, but what are the things i should be aware of?

Thanks in advance for any input.

Even though you may like or want to work as an IC, it all depends upon the way you are asked to work. There about 8-15 rules that the IRS uses to distinguish whether you're an IC (click here)

 

[blysssful]

Virtually all the advantages of being classified an I. C. are on the employer's side. They pay less taxes (savings won't be passed on to you), less paperwork, easier to fire you, and fewer benefits to pay for.

If scrutinized by the IRS, almost all IC OD's would fail the determination test (IRS Form SS-8).

If you are hired as a IC, you should be able to determine your own hours, use all your own equipment.

A local insurance agent can quote liability ins. or go through your state association/look on-line.

Find a accountant to help get set up, one with experience with medical professions and Quickbooks will help. You can do most bookwork yourself after that. You may need to pay taxes quarterly.

Can they fire you easily even if you're holding up your end of the contract? What is the determination test?

 

[optsuker]

Can they fire you easily even if you're holding up your end of the contract? What is the determination test?

You can be fired as a IC or employee, but it's more difficult to collect unemployment as an IC (it may require multiple hearings/reviews)

The IRS, if asked, will formally tell you if you're an IC. Completing the Form SS-8 and getting a ruling will end all debate on IC status.

It is extremely rare that any employer will do this though (because they know they would lose and have to pay more).

Unless you are a temp or doing fill-in work. you should always push for employee status.

 

[yOyOYoo]

"Unless you are a temp or doing fill-in work. you should always push for employee status."


Agreed. Employee status FTW! It's all about having your employer pay for all of your health insurance, malpractice insurance, state and national fees, CME fees... and don't forget about the paid time off!

This being said, I've not heard of that many employers who are optometrists offering this for their associates, only in ophthalmology practices...

 

[hannapaige]

The growth of jobs during the economic recovery has been anemic. Many businesses are choosing to hire independent contractors to fill gaps. Before you sign on as an independent contractor, it is important to understand the differences between getting hired as an independent contractor rather than an employee. Moreover, businesses and individuals do not always understand the classification of employees versus independent contractors correct. The IRS can determine that an individual is incorrectly classified and levy retroactive taxes on that business. Section 503, however, allows a business to maintain independent contractor classifications if certain criteria are met. This narrowed criteria affects an individual mostly in the decision to work as an independent contractor or employee. If you are offered an independent contractor position, make sure to set aside the cash for taxes and pay your taxes fully and on time. If you suspect that you would be more properly classified as an employee, discuss it with the individual in charge of your contract as soon as possible.