Nursing Corporation, Tax, Liability, International Questions

NedRN · Apr 11, 2016

Yes, your corporation or LLC does not have to be nursing specific. In filing incorporation documents, you can simply state purpose is unspecified. But even if you put something very narrow there, your company can do any sort of business it wants to.

Most any business book will walk you through this very simple and cheap process in most US states (no idea about Canada but there is no real downside to operating a foreign Company over US from a taxation standpoint). Most pick LLC over corporations these days for less paperwork as taxation choices and costs are identical.

As as far as insurance goes, it depends. If you are going the locums agency route, they will provide insurance. And housing and per diems just like regular travelers (but better) with or without 1099 pay (no income tax withholding - an option with your own business). If you contract directly with a provider, insurance may or may not be required on your end. Insurance will not be that expensive unless you do OB.

Great question about cruise ship nursing! Not often I'm stumped. There would be a window of working without a license in port (unless there are laws covering this) but you don't need local licenses on the open seas.

Working conditions (hours) and pay is bad on cruise ships. Focus on other opportunities first.

Julia77 · Apr 12, 2016

Thanks, I read up on your posts, and was hoping you would help with some information!

Julia

NedRN · Apr 12, 2016

Obviously, your general topic is too big to discuss comprehensively in short posts. However, let me give you an idea of what to research further.

In general, recommendations to incorporate are to do it where you live. You would have to look into the costs and benefits of doing it in your local province versus establishing a nexus in a US state to incorporate there.

Most professionals incorporate for the benefits, not for limiting their personal liability. The reason is that a corporate structure does not protect your personal assets from professional malpractice (or nuisance lawsuits). For that, you need adequate professional Liability Insurance. Having a corporate shell would protect you from the actions of other employees, owners, or partners; and from liability related to property - like someone slipping on the ice in front of your office.

In your case, you may not need to incorporate at all unless you need certain benefits. A sole proprietor is the default business "entity" in the US and instead of a corporate income tax return (Form 1120), you simply add a Schedule C to your personal US tax return (Form 1040). On the Schedule C, you report your revenue and business expenses. The net amount flows over to your personal return. So you still get "first dollar" deductions for any type of business entity, no gain from a corporate shell. In fact, most NPs (the most common ones I work with are CRNAs) are sole proprietors (if they are not employees) and even some physician locums are also sole proprietors.

For regular or "C" corporations (LLCs can also elect this tax status but rarely do), profit sharing contributions to a 401K retirement fund, and all health related expenses down to aspirin can avoid both income taxes, and just as importantly, so-called payroll taxes or FICA (social security) that costs 15% of payroll. That is a pretty huge tax benefit.

The largest corporations are all C corporations for a number of reasons related to shareholders, but most small businesses are S corporations - also call pass-through as any money left over simply flows to your personal tax return. LLCs are pass-through be default. Pass-through is thought to be simpler by most accountants and small businesses as there is no chance for "double taxation" as in a regular corporation from paying corporate tax on any retained earnings, and then the recipients paying income tax on the dividends.

The big tax benefit of a pass-through entity is the ability to take large K-1 distributions that are not subject to FICA, saving 15% - you still have to pay income tax though. In my own analysis, this appears to be a benefit freater than the tax savings available to C corporations when net profits start to exceed $150,000 a year. In essence, you set a fair salary for yourself, and take the balance as a K-1 distribution.

Mind you, this is unorthodox advice, but I believe I have done much better as a C corp for the last 12 years than I would have as a pass-through. (My net profits after expenses have never been close to the threshold mentioned above).

All of this US taxation stuff is probably gobble-de-gook to you, but should be considered if you start a US based business entity. I have absolutely no idea about the interplay with Canadian taxpayer status, but it is my understanding that you can declare the US as your primary tax center and avoid all Canadian taxes (and presumably health benefits) and come out ahead with our lower overall taxes. I know several Canadians that have done this long term and seem happy. For full benefit of US tax rules related to business travel, you need a personal tax home. Your current one will work, but to avoid Canadian taxation, you probably need a US tax home (a nexus with a residence you own or pay rent and return to regularly). For that, you should get a consult with an expert. Traveltax knows cross country taxation as well as being a leading authority on traveler taxation. Free phone consults! But he can also do your taxes expertly no matter what your future brings. My suspicion is that while residency will likely prove important, incorporating will not be, especially if you take the easy route and work through an agency.