Independent Contractor vs. Regular Employee?
- 0Feb 24, '13 by reeyaI am a FNP currently happily employed as a regular employee. My benefits (health insurance/ 401K/CME/PTO/Sick pay/7day national holiday pay etc will kick in from March 1st. This week my office manager gave me a choice that I can be a independent contractor once I get my dea license (soon). She also said I would be paid $2/hr more as a contractor. She told me that extra $2 is for my tax (instead of paying gov. my employee tax they would credit it to me so I can do my own taxes). They will provide health insurance credit $100/month but no other bennies.
I am new to independent contractor concept. Please educate me if $55/hr as regular employee vs $57/hr as independent contractor better. I have couple of weeks to think about it. Can I negotiate more as contractor since I will be paying federal tax, SSN, FICA, Disability by myself at the end of the yr. Or, should I just be a regular employee at $55/hr with no tax hassle to deal with at the end of the yr?Last edit by reeya on Feb 24, '13
- 1Feb 24, '13 by brandy1017An extra $2 hour would definitely not make up for the loss of benefits and the extra taxes you would have to pay! Sounds like they are trying to take advantage of you! Stay regular staff! Also I don't know where you'd be able to get health insurance for $100/mo! Sounds like a terrible idea if you ask me!
They would not be trying to get you to be indept if it were not to their benefit. Think about it! Now if they were paying you double ie $100+/hour than perhaps, not $2/hour, no way!
- 1Feb 24, '13 by NJprisonrnAs someone who used to be self employed, let me tell you that taxes are a HUGE hassle. I would take the $2 less per hour and let someone else handle all of that nonsense. I am an employee now and I appreciate the time that I am not spending dealing with paperwork and setting money aside for quarterly taxes. PLEASE, stay an employee!
- 1Feb 24, '13 by PsychiatricNPHi Reeya - I have both contract and employee relationships in my current work settings. My accountant has recommended that I negotiate at least 20% above my typical hourly employed (W2) rate for contract (1099) work. This increase is to account for the local/state taxes that must be paid in addition to the self employment tax, etc. Both situations (W2 vs. 1099) have benefits and drawbacks based on your particular tax situation; though I can assure you that your employer will be saving significantly more than $2 per hour by paying you as a contractor rather than employee. I would suggest that you consult with an accountant (definitely money well spent) as you explore which options are best for your situation.
- 1Feb 26, '13 by emtneelI am an independent contractor and have been for ~5 years now
Sounds like they are trying to rip you off!
you should make like $20/hr more as independent contractor...
Just think of the vacation alone you won't get paid.
As an independent contractor
You pay your own CMEs most get 1500-2000/annual allowance
You pay your own health insurance which you can deduct 100% and all meds, etc..
you pay your own malpractice ~ $1500/year
A BIGGIE, you are NOT covered under workman's comp!!! And it is VERY difficult to find a health insurance company that will give you something in writing stating they will cover work related injuries. I have personally dealt with this and had to switch to a worse health insurance plan but one that covers work injuries.
you pay your own vacation
you pay your own life insurance, disability, etc..
you pay your own retirement without employer contribution
you pay quarterly taxes-- if you are at one job, one state, this would not be a big deal, you just talk with your tax person and send a check every 3 months. i've worked multiple states, in one year with multiple companies.. that makes it complicated at the end of the year. i pay ~10% taxes (as nurse ~30%) but i only work half the year so if my income was higher i probably would have to pay more, but you can deduct a lot more as independent contractor.
your are also responsible for your 7% of SS tax and what the employer would normally pay 7% so you are responsible for the whole portion.
Most ERs which I have dealt with who have independent contractor status for the ER staff pay midlevels $65-90/hr. I think some offer malpractice but that's it.
Right now for me, it works well because I can take lots of time off and schedule when and where I want to work and not limited to 2-3 weeks vacation/year. Plus I get paid housing, travel, rental car, gas.. so I don't have many expenses and lots of deductions.