Incorporating as a nurse

[brotherbear]

...rumor has it that incorporating yourself as a nurse (ie. getting paid on a 1099 vs W2) has major advantages. Just a quick poll on how many of y'all know people who have done this. What the advantages are, e.t.c.

[netglow, ASN, RN]

Getting a 1099-MISC, means you are self-employed. You would not be considered an employee of the facility where you work. You would be "vendor" status. Your work would also file that they are paying you and how much as an "expense" to the IRS. Getting paid 1099-MISC means nobody is going to withold taxes from your pay, thus you would have to figure and file estimated quarterly taxes. If you do not pay estimated tax you will suffer financial penalty, and bring yourself up in hibeam for an IRS audit.

[netglow, ASN, RN]

Oh yes, and most importantly, getting a 1099-MISC instead of W-2, does not mean you are incorporated at all. Incorporation is something else on its own.

[canesdukegirl, BSN, RN]

Clear-you never cease to amaze me with your knowledge! OP, I noticed your screen name. Former military?

[netglow, ASN, RN]

Ha, nope.

On A Clear Day You Can See Forever...

just has to do with clarity being sweet serenity as someone sang...

[BabyLady, BSN, RN]

...rumor has it that incorporating yourself as a nurse (ie. getting paid on a 1099 vs W2) has major advantages. Just a quick poll on how many of y'all know people who have done this. What the advantages are, e.t.c.

Incorporating would have no benefit whatsoever.

[Jolie, BSN]

Being self-employed and working as a contractor also means that you will need to carry your own Liability Insurance, pay for your own workers' comp policy, pay the entire SS contribution (13% versus the 6.5% typically deducted from an employee's paycheck) and purchase your own benefits.

You would need to research this carefully to determine whether it is worth it from a financial standpoint. I doubt that it would be.

[chuckster, ADN, BSN, RN, EMT-B]

A corporation is type of business entity. It is used so that the owner(s) do not risk their personal assets, as is the case in a proprietorship or partnership.

You may be able to incorporate, in which case the payment from the hospital (or whatever entity purchased your services) would be to the corporation. That payment could then be disbursed to the owner of the corporation (you) however, there would be corporate tax involved (nominally 35%) and then you would also owe federal income and payroll (social security & medicare) taxes in addition to state income tax and any local taxes. The filing fees for corporations are also substantial. In theory, you could deduct the costs of running the partnership (such as transportation and insurance) from the revenue received, which would reduce the amount of corporate tax and in some relatively rare circumstances could make being incorporated worthwhile.

As others have noted, just getting a 1099 instead of a W-2 doesn't make you a corporation. Companies sometimes hire workers as individual contractors and pay them via 1099's to reduce their expenses and liablities. There have been numerous lawsuits over this practice however and it is far less common now than it once was.

Interestingly, though a corporation exists only as paper exercise, the US Supreme Court recently held in the Citizen's United case that corporations have essentially the same rights and legal protection as do individuals. At the moment, all this has done is allow corporations to make essentially unrestricted politcal contributions. I'd expect some sort of corporate civil rights" cases in the near future as a result, so there may well be some reasons to consider incorporating then.

[BabyLady, BSN, RN]

Costs associated with getting paid 1099, are tax deductable whether you are incorporated or not. You deduct them under "unreimbursed business expenses" and should keep a log of what your expenses are in case you are ever audited.

The basic reason for small individuals to incorporate is to protect their assets if they are ever sued. However, I would wager as a nurse, there is little doubt in my mind that you would escape this, incorporated or not, should you ever be sued.

That is why you need Liability Insurance.