Employee versus independent contractor in Skin Disease and Care- There are advantages and disadvantages to both, so it is important to understand the differences before making a decision
- Employee
- Financial stability: you do not need to worry about how many patients are canceling per day or if the clinic is slow when starting out since you receive a fixed monthly paycheck
- Fringe Benefits: health insurance, paid malpractice insurance, ± retirement account, ± health savings account, CME time with stipend
- Taxes: not complicated since taxes automatically withheld from the paycheck every month
- Lack of autonomy: biggest disadvantage
- Independent Contractor (IC)
- Autonomy: biggest advantage
- Tax deduction: any work-related expense (reasonable and customary) can be deducted from taxes as a business expense, such as (but not limited to):
- Travel: commute to/from work (must be from one office, such as home office, to another office) and other related business travel
- Licensing and professional association fees, conference dues, journal subscriptions
| | | | | | FICA (Federal Insurance Contributions Act) : includes Medicare and Social Security tax | | | | | |
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- Retirement plan contribution (up to 25% of earnings)
- Self-employment taxes: FICA tax
- Financial instability:
- One receives a fixed percentage from the total amount collected (from insurance company/patients) – not the same as the amount billed (which is often much higher) o When starting out, it can take several months to build your practice and enlist in different medical insurance plans which means less income early on
- Lack of benefits:
- You must provide your own health insurance and malpractice insurance; of note, health insurance without a large employer can be quite costly, so weigh this carefully
- Taxes and incorporation:
- Time and money will be spent to create a corporation, file for an employer identification number (EIN), and to pay an accountant
- Filing taxes will be much more complicated than if you were an employee
| | | | | | Incorporation : forming of a new corporation (recognized as a legal entity under the law) | | | | | |
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