PRN vs Independent Contract

ainz · Oct 5, 2003

State law varies regarding workers comp and benefits etc.

If you are an independent contractor then you should have a contract that describes the relationship you have with the company or office. Like what services you will provide, what kind of insurance requirements (professional liability) each party has and so on. Generally if you are an independent contractor you provide your own benefits, pay your own taxes and social security on a quarterly basis (unless you understand accounting and tax law I would suggest getting a CPA).

A PRN employee is just that, you are an employee and the laws that govern employee/employer relationships apply. They do not have to provide benefits in this case however some states may require them to depending on the law and things like how many employees that have etc. However, they may allow you to participate in their group plan but you pay all of the premiums.

Not sure about your circumstances but being an independent contractor carries with it many headaches around paying the taxes and keeping all of that straight. If you are good at that kind of stuff and ike it then it is OK. Being a PRN EMPLOYEE requires them to handle that for you with each paycheck, much less headache and probably less expensive for you. Check your state laws as well.

BarbPick · Oct 5, 2003

AnneRN,

I was faced with the same situation in 1991. I used my head and went to our accountant.

I have shared the information I am giving you with many nurses who have saved big time on their taxes.

My accountant incorporated me. Independent Contractors get a different tax form. It is called a 1099. The employers doesn't take out any taxes what so ever. If you do not incorporate, you are responsible for 15% self employment tax.

IF YOU DO INCORPORATE, YOU WILL SAVE A FORTUNE.

My husband is a police officer and works many off duty jobs

He gets 1099s as well.

Even if you do not do the independant contractor, use it to open a home business. This will allow you to deduct your aol account bill every month (or other ISP) Your car insurance. 50% of your phone. DONOT DECLAIR A HOME OFFICE, IT SENDS RED FLAGS.

This can be done along with a traditional job where they take out taxes.

I sell on ebay. I declare the income and when I take the deductions I mentioned, the corporation loses money and it totally lowers how much tax I owe, and I get a large refund at the end of the year.

Had I not incorportated, I would get very little back from IRS. Maybe 100 dollars, instead of the 3,800. I got back last year. I have done this since 91, got a small audit and after the IRS agent looked at the paperwork, he said "you go girl!!!'

Be legitamate, declare your income and deduct things you need in business off the top of your taxable income. Contact me if you have any questions.

AnneRn · Oct 6, 2003

Thanks for the reply ainz and barbpick, Now I'm wondering, if I were to go independent, how in the world would I even know how to develop a contract with the employer and halfway know what I was doing and making sure I was getting all the bases covered? Do you know specifically who I would contact at the state level regarding employer/employee relationships and the law governing it? Barb, I have heard of the 1099 before and I would definitely go that route if I were to go independent :) Thanks for all the great information so far!!

indie · Oct 7, 2003

AnneRn:

Search former postings on this subject att allnurses.com. There is lots of information already posted.

Many of us have got there, but it does take quite a while to put in the learning/reading/thinking time. Don't take something that someone hands you on a plate - going thru the process of developing your own (with good background advice/teaching) is the only real way to learn how it's done.

BarbPick had great info. to pass on but each state and each individual is a little different.

Good luck.

Agnus · Nov 29, 2003

Being like an independent contractor and being an independent contractor are not the samething.

If you do not have a business license do not accept a 1099. If you do not have a businsess license and the employer does a 1099 instead of a w-2 they will get in trouble with the IRS.

There are some very strict IRS rules about what constitutes an independent contractor.

1. is there a contract?

2. Does the employer dictate how you do your job.

where you do it, and when you do it.

to meet IRS guidlines you must be free to perform you job in any manor you choose, at any place (ie you do not have to do it at the employers establishment) and they do not dictate the time.

3. A contract needs to spell out exactly what you will do and when the job is finished. For example the job is finished when the project is completed. Or you set a specific time Like Dec. 2003. This time line marks the termination of the contract.

Contractors contract for a specific project or a specific time period.

4. As an Employer I know that the employer can get in VERY big trouble if they fail to provide their contractors with coverage for injuries that take place on thier premises by contractors.

If you are considering contracting you must charge a much higher rate than they would normally pay an employee (PRN or not) because you will have higher expenses. Keep in mind if you are a independent contractor you will be paying self employment taxes and if you choose to keep social security you will pay double what you pay as an employee. Also consider the cost of labor you will have in doing all the tax and legal paperwork that you will have in figuring your price.

Independent contracting is not for the faint of heart. If yu desire self employment it can be a boon. Remember you are a ground breaker as Nurse contrdactors are not real common yet and not generrallywell accepted.

Do not do this without a business license.

I am not trying to paint a negative picture just trying to give you a real picuture.

Some employers try to cut corners by 1099ing employees. It is illegal. They are trying to avoid the expenses associated with employees. Ask this employer if they intend to 1099 you? or will you still get a W-2. This will tell you two things.

1. If they 1099 they are unethical, and will do everything to cut corners (this means you may get hurt as well). If they W-2 then you will not be an independent contractor.

Now if they W-2 you and you think you would like to do it as an independent contractor they will probablly be open to it as it will save them the extra labor and cost of using you as an employee. I would definately think twice if they wanted me to accept a 1099 without a contract without a license.

If they present themselves to you as an employer then they better use the W-2.

As an independent contractor you are self employed that may sound inviting but you will have to provide all your own medical coverage, disability insurance, etc. Please, look into what this will really cost you first. I know you do not have this coverage with this employer but you will at least have workers comp, unemployment insurance, some states even require you to be covered under a state disability plan even if you get no other benefits, plus you are responsible for the employer's half of the social security. Ther are some definate advantages of being PRN over independent.

I have a nursing related business and I work as a PRN employee for someone else. I would not consider contracting with my employer as it would not be worth the trouble and expense.

On the other hand my business is totally different and I alone carry all the expenses. But I conduct my business totally without dictates of anyone else.

In my PRN job I let them know when I am available and willing to work. If they need me they call.

Agnus · Nov 29, 2003

i just reread your post. It sounds like you applied to one office of an employeer and now you are cosidering applying to other offices owned or operated by the same employer? And you are considering contracting at one of those offices and being an employee at another?

Oh we are getting into sticky waters here. You need to deside what you are now. An employee or a contractor.

A contractor will be likely used at any and and all of thier offices. An employee may be hired for one or more offices. (ahthough a contractor can be contracted to one specific office if spelled out under a particular project contract)

I would not touch this with a 20 ft. pole. I would not mix these apples and oranges. The legal implications are staggering.

Pick one and stick with it. Don't do both in this situation. If an issue arrises about anything you could be held liable as a contractor and you will have to hire an attorney go to court to prove that you were an employee in a given situation and you will likely loose.

this idea muddies the legal water in a way that is extreemly bad for you.

They can denie you your employee status and the already mentioned hidden benefits of that status. As an independent you stand alone. Trying to do both for the same employer put you in a very dangerous legal position. NO NO NO

AnneRn · Dec 1, 2003

Agnes,

Thank you very much for making the muddy waters clearer. I have been reading and learning about this independent contracting idea and kept thinking to myself that perhaps I really did not have a good idea of what I was trying to do exactly. Your posts really helped me understand the difference between prn and indepedent contracting. Especially thank you for the information regarding 1099's. This gives me a bunch of new information to keep in mind as I try to decide whether this is something I really want to pursue. :)

Anne

NurseBenz · Dec 1, 2003

Angus, what is the "business license" that you have mentioned in a few of your posts? Are you talking about a business entity like a corp. or sole proprietor or what? I'm am confused, please clarify. Thanks

NurseBenz · Dec 1, 2003

Agnus...sorry got your name wrong.

Agnus · Dec 1, 2003

Originally posted by NurseBenz
Angus, what is the "business license" that you have mentioned in a few of your posts? Are you talking about a business entity like a corp. or sole proprietor or what? I'm am confused, please clarify. Thanks

No these are not licenses they are a way of legally structuring your business for tax and liability purposes.

Every state requires you to have a license to be in business. Also, some counties require a seperate license and a city may require yet another license.

Start at the city level. Call city hall and find out thier requirements for a license. If they do not have a requirement call your county court house.

Operating a business without a license is illegal. The license allows you to set your self up as in business.

If you are a contractor you are in business in the eyes of the law.