LLC for 1099 contractor

[cyanide12345678]

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Is there malpractice liability and tax benefit in forming a LLC for a 1099 independent contractor? How does malpractice insurance work if you work as a LLC? Will the malpractice coverage be for the LLC or the physician him or herself. If malpractice covers the LLC, and both the individual and LLC are inamed n a lawsuit, how does that work out?

 

[southerndoc]

Some tax benefit, yes. There is NO malpractice liability protection from an LLC. You have some civil protection from billing litigation or from creditors, but there is no malpractice liability protection at all. LLC's will not protect your personal assets from a malpractice judgement.

 

[Hamhock]

Some tax benefit, yes.

I have looked into this fairly extensively for 1099 IC who is solo. I can't seem to find any tax benefit these days (in the past there were certainly benefits).

LLCs seem to have benefits (tax and liability [not malpractice]) for groups (>1 person/employee) or physicians with offices.

I would love to be shown to be wrong, as I could then improve my tax situation.

HH

 

[Groove]

I had a lawyer and CPA look into this a few years ago and from what I remember, they pretty much agreed that there was very little malpractice liability benefits from incorporating. At the time there were tax benefits. I used to have an S corp but it turned out to be more of a hassle for me and I didn't feel I was really benefiting from a tax standpoint, so I changed back to my PLLC. From my standpoint, I've always felt it was easier to justify theoretical "business" expenses when owning a PLLC but I don't know if there's any validity to that argument or not, it's just always made more sense to me.

It would be the incredibly rare exception for someone to go after your personal assets in a malpractice case. In fact, I've never even heard of it happening, has anyone else?

 

[southerndoc]

It would be the incredibly rare exception for someone to go after your personal assets in a malpractice case. In fact, I've never even heard of it happening, has anyone else?

It happens all the time in Chicago, but luckily doesn't happen frequently where I practice. In fact, I've never heard of it happening where I practice.

 

[The White Coat Investor]

No liability protection from malpractice.

Possibly some saved medicare tax if your LLC is taxed as an S Corp.

 

[bravotwozero]

There's also that 'pass through' income deduction, if you make less than a certain amount of money, or can get your taxable income down to that level, which is about 20%.

 

[GonnaBeADoc2222]

No liability protection from malpractice.

Possibly some saved medicare tax if your LLC is taxed as an S Corp.

This. My accountant, who stood to profit off my forming an LLC and him handling all the S-corp payroll, taxes, etc. advised me to remain a sole prop. At an income level of about 400k, I think I would have netted about 1k savings. Wasn't worth it to me for the complexity.

There's also that 'pass through' income deduction, if you make less than a certain amount of money, or can get your taxable income down to that level, which is about 20%.

Sole proprietors qualify for the pass through deduction in the same way an LLC does.

 

[NYEMMED]

From a tax perspective is it better to be a W2 or a 1099?

 

[southerndoc]

From a tax perspective is it better to be a W2 or a 1099?

Depends if you like managing your own finances and have the correct expenditures to have deductions.

As a 1099 you can deduct almost everything. Keep a separate business account. Your purchases for pens, scrubs, stethoscopes, etc. are all business expenses that can be written off. Work cell phone, home office (if used exclusively to finish charting and do your ER/EMS work), etc. are deductible as business expenses. As an employee, your deductions are limited.

Do NOT deduct your disability insurance though. If you do, and if you become disabled, your benefits are taxable.

 

[cyanide12345678]

Keep a separate business account.

Would i not need a llc to make a separate business account? Or at least some sort of business structure with a separate EIN?

 

[southerndoc]

You can get an EIN as a sole proprietor. I'm not incorporated and I have my own EIN. I use Bank of America. I have a business login that shows my business checking, savings, and credit card accounts. My personal account shows everything (including business accounts). When my direct deposit is made into my business checking, I transfer funds to personal checking and savings after business expenses are paid.

 

[GonnaBeADoc2222]

If you remain an unincorportated sole proprietor there is no IRS requirement to maintain separate business accounts. You may choose to do this if you wish for organization. I keep all my business expenses pretty organized using a detailed spreadsheet that my accountant gave me.

 

[southerndoc]

If you remain an unincorportated sole proprietor there is no IRS requirement to maintain separate business accounts. You may choose to do this if you wish for organization. I keep all my business expenses pretty organized using a detailed spreadsheet that my accountant gave me.

Not required, but helpful and recommended.

 

[The White Coat Investor]

From a tax perspective is it better to be a W2 or a 1099?

Question too simple. At the level you asked it, W-2 since the employer pays half the payroll taxes for you and you have to pay both as a business owner paid on a 1099.