Traveling as an Independent Contractor?

Specialties Travel

Published

This may not be the correct forum for this, but I am currently a travel nurse and I am finding that the companies "are not my friend" when it comes to getting me the best jobs and the best money. Mostly, what I find is that you are expected to take whatever they offer you and be happy to get it.

I am thinking there must be a way to do travel nursing as an independent contractor, but maybe not. Anyone out there done this before? If so, could you tell us about it and explain how to get started?

Thanks,

swillmsrn

The rulings have to do with why you would not be considered an employee of the facility, if you are following their schedule and they are in charge of when you work, etc. The hospitals have been fined for this in the past.

I just know of a number of people that were independent, and were not incorporated that had trouble down the way with meeting the above. The only way around it is to have an LLP, or to incorporate.

Suggest that you speak to an accountant that deals with these types of issues.. Each state is different, but this happened in various states all over.

There are quite a few posts about this also. Take a look at some posts by WyomingRN.....................she covers the same things in her posts. Just do a search on the top of the page to pull these up.

One of the major agencies in Michigan had a very large court case with the IRS a number of years ago. This was concerning the use of independent contractors under them. Per the ruling that came down from the IRS, there is a list of requirements that must be met to get around the employee ruling. Self-employed is not covered under this ruling, is actually prohibited, and you could end up with fines and quite a bit of back taxes.

Any of the hospitals that I contracted under for years required corporate status. If you set up as S-Corporation, then you are not paying any more in taxes, and you usually end up paying less. There are usually more items that you can deduct as a corporation, than as a sole proprietor.

What you are referring to is a completely different issue but I understand the confusion. This is not actually the IRS saying that you cannot be an independent contractor, just that this agency did not sufficiently differentiate them from employees. The IRS has a built in bias where they would like to see everyone be employees. One advantage to being incorporated for this single issue is that a corporation cannot be an employee (although the sole owner of such a corporation must be that corporation's employee - a status that is in some ways not as good as being a sole proprietor).

The IRS has in the last couple of years been closely examing a number of agencies on this issue. The ones who did not do it right got burned (very expensive as the IRS generally holds the agency financially responsible for back taxes and penalties - not the traveler) and others went through with flying colors. I can name names.

The IRS is even trying to claim that physicians are employees recently, despite a long history of being independents (which is often required by state practice law). It is a complex issue that mostly only manifests itself if you choose to subcontract with another agency. The IRS has guidelines on what makes an independent contractor not an employee and these can be found in various places on their website. In addition, there are some good texts on the subject to help those who are interested in not being reclassified as an employee (mostly a risk for the agency you work with). I recommend:

HIRING INDEPENDENT CONTRACTORS: The Employer's Legal Guide, Attorney Stephen Fishman, AUG 2000 NOLO $29.95 304 pages

* assess who qualifies as an independent contractor

* hire ICs without risking an audit

* handle an IRS audit

* take advantage of the IRS's "Safe Harbor" law

On the other issue, I have heard this said before. All I can say is that you are probably setting up the hospital to require that in your dealings with them. On none of my contracts or other paperwork does the word "Inc" appear and I have never been asked about my business structure in over two years of operation as a direct contracting independent, neither before nor after incorporation. As I said, it is a wise hospital to look for that (for good reasons including the above issue), but so far in my experience they do not. I am assuming that they are assuming that I am incorporated but I don't bring up such issues while negotiating with them. That would show signs of insecurity and lack of experience that could bring down a business relationship.

That's unprofessional. I have also heard the same thing about requiring submission of a worker's comp certificate of coverage. Like the incorporation issue, I have been ready for such a request, but have only been asked for it once now. Some things, like , you know that they are going to need to see it and you just submit it with your contract. Otherwise, the less they know about your business, the better off you are.

In Michigan, the hospitals will not sign a contract with you unless you are incorporated. And I have been doing this for ten years or so. Guess that I am dealing with wise hospitals. Not sure where you have been working.

When the court case went thru, and the agency won, the one stipulation was that the independents needed to be incorporated to meet the requirements of not being an employee. And as you have stated, the IRS can make a big issue of this.

Who wants to take a chance with getting into trouble with the IRS and taking months to straighten it out? Getting set up as a corporation takes almost no time at all, and costs about $100 per year. Worth it my opinion.

And any attorney or accountant that I have spoken to about it.

I will take an S-Corporation any day over not having it. All of my friends are set up the same way. Also in Michigan, no other agency will even consider you as a sub-contractor thru them without having corporate papers on file.

Since I have never been through that process, how do you demonstrate to a hospital or agency that you are incorporated? I have a subcontractor that is incorporated but I don't know what documentation I could ask for. I suppose (depending on the state of incorporation) I could look up the state filings if I cared. (I don't really care so much, but in any case, just like most businesses, I take the word of my business partners - including hospitals. Lot of work to research all of your vendors).

I can also tell without looking at the case you cited, that it was brought in Tax Court, and did not change any laws - it affects only that one agency. But I am curious, if the agency won, why did they have to make that stipulation?

Also, for everyone's knowledge, what agencies in Michigan will subcontract? I don't know of any but agencies seldom publicize this.

You can actually tell by a name if it is incorporated, it will have "corp" at the end or "inc." It is also quite easy to have them show you a copy of the papers.

They won in the court because they were able to provide enough proof to satisfy the courts, but they asked what to do to make sure that this never happened again, and they were told to make sure that the sub-contractor was incorporated or an LLP. This also helps with people that are just going to be "fly by the night" as the expression goes.

I can't post the names of the agencies here, this site is Googled all over the world and I would not want them getting unindated. That is not the purpose of this. If you send me a pm I will give you the names.

Which state are you located in?

I'm incorporated in Ohio, currently doing a contract in California.

And you can't always tell who is incorporated from a name. If you look at a list of agencies, many (who certainly are incorporated) do not use Inc., or Corp. Technically, you are supposed to, but there is nothing to prevent a corp from using a dba (as do I). And since no one checks (sounds like you've never submitted corporate paperwork either), companies can and do represent themselves as incorporated when they are not.

Even my bank did not do any sort of due diligence on my agency. Just had to give them a corporate resolution authorizing opening an account.

There are not enough independent contractors to inundate one agency. And I'm sure that an agency would love to have a huge response!

A question: If you have been doing independent contracts for 10 years (and implying that you are still doing them), why are you so negative about others doing it? Certainly it is not for everyone, but owning your own business is the American dream.

I have submited corporate paperwork with every contract that I have had.

If they are not using "corp" or inc in their name, they are supposed to have it somewhere on the business card, etc.

I am definitely not again others doing it, I have helped set up quite a few people with doing it. But for those that do not think anything thru, just the idea of getting a bigger check, they need to do the research and be aware of everything else that goes into it. Such as the hospital doesn't have to pay you weekly or even every other week, as you now become a vendor and are paid as such. You are repsonsible for Workmen's Comp, separate insurance, etc. Just want everyone to do their homework. Or they can cause more problems for themselves.

I get contacted by people all of the time, that want to set up their own agency, but have never worked agency a day in their life and know nothing about it, but are sure that is what they want to do. I just wany everyone to be careful.

When I opened my accounts, I only needed a copy of the resolution, that is standard.

You know me from only this thread, but I spend quite a bit of my time helping new grads pass NCLEX, as well as helping nurses come to the US. And finding them jobs. :)

Unfortunately, there are many who have no agency experience, experience with marketing themselves, nor the experience behind them who wish to be independent. Any one wanting to do so needs to do the research, check out what it includes as far as paperwork in their state, etc. Each area is different. What works in one area will not work in another area.

There are already hundreds of threads on this site, especially the agency forum where I have stated what needs to be done. There are actually only about five things that need to be done to get started, but as both of us know, there is much more than that involved with becoming independent and staying independent.

And there are people out there that have quit their jobs to go independent but never did any of their homework first, and things just did not work for them.

I want nurses to do their homework first. Find out what will work for them, and what won't. Find out what contracts are like in their area. Talk to their accountant, if they have one, to see what is the most beneficial way for them to go. Talk to an attorney if they need one to help them set up their corp. if they do not know what to do on their own.

We can't offer legal or accounting advice here. These are things that need to be thought thru.

These are a few of the reasons why I have answered the way that I have.

Going independent is not something to be taken lightly.

Since starting this thread, I have learned quite a bit, thanks to all of you responders. Now, however, I have another question that still fits in with this thread, I hope.

If I were to get my own contract, I am okay with arranging my own residence because the ones I have had with my agency have all been horrid!!!

Currently, I have an upstairs apartment with ac that will only cool my home to 80 degrees here in Oklahoma. So, I think I could probably do better myself.

But, my real concern would be in getting my money. How exactly does that work and what is the lag time between working and getting paid? I would have to see how long I could float without a weekly check to decide if I want to try this.

So, again, thanks for all the useful information and please, keep it coming.

I have had fabulous housing with my assignments, usually one of the nicest complexes in the city. Alot has to do with the agency that you are with.

Your lag time could be up to three months as an independent, you become a vendor, and are paid under the hospital's system for getting paid. Usually payment is every month, just like the agency that you are working for is getting paid. They are the ones that are fronting you the money before they get paid by the facility. But it can be up to 90 days in some areas.

Hope that this helps..................

But, my real concern would be in getting my money. How exactly does that work and what is the lag time between working and getting paid? I would have to see how long I could float without a weekly check to decide if I want to try this.\

After you get a contract and start working, you will do your timesheet as usual on the hospital's schedule. When the pay period is done, you submit a bill for worked hours. Standard billing practice in most industries including this one is 30 days net. You can include in your contract interest for late payments but in my experience, most hospitals average out paying on time.

This means it can be as much as seven weeks from your first day of work to first payment. And you have to pay for housing up front. I would recommend to all to have three months expenses in hand before taking any sort of travel assignment, even with a regular agency. You have no way of knowing what might come up so it is only prudent to have a reserve.

Incidentally, few agencies can afford their own payroll with this billing "lag." So they finance their payroll with a speciality firm called a "factor." Factor rates run from 2 to 6 percent of payroll, a huge cost to a small agency. Between this, and certain other costs such as worker's comp and unemployment (that in most states the self employed and corporate officers do not have to pay), you have a sizeable cost advantage over a regular agency. Not even mentioning marketing and office costs!

+ Add a Comment