Have You Considered 1099/Independent Contractor Status?

MSOC would like to inform our nurses and CNAs about the benefits associated with working as an independent contractor (1099 filing status). The following sections describe what you need to be eligible to work as an independent contractor, the benefits in doing so, the difference between an independent contractor and a regular employee, and a brief testimonial from one of our nurses who is an independent contractor.

Criteria- There are three main criteria that need to be satisfied to be considered for 1099 status and work as an independent contractor:

1. Do we determine your schedule?
   No. We give you options and you choose when and where you want to work.
2. Do you work for MSOC exclusively or for others as well?
   Many of you also work for hospitals or other agencies. If so this criteria is met as well.
3. Are you incorporated?
   In order to take advantage of the tax benefits you must be incorporated. Many RN's are not but could easily be if they knew how.
   

Benefits- If you spend money to run your business you can deduct it from your taxes. Here are some examples of things you can deduct as business expense:

• Cell phone
• Your home office if you use it as your primary office
• Your car or car mileage
• Your cost for meals and entertainment if your business was to meet clients at a restaurant and you discussed business
• License or education requirements for your "business"
• Laptop or computer equipments
• Office supplies
  
• Travel related to your business

Take this example: Say you travel 30 miles each way to a hospital and work 3 shifts per week and 48 weeks per year. Your tax deductions would add up to $5,054!

What's Different?

1. You must make quarterly tax payments based on the tax rates that apply to your income: http://www.moneychimp.com/features/tax_brackets.htm
2. In addition to your normal taxes you must pay self employment tax of 15.3%: http://www.irs.gov/businesses/small/article/0,,id=98846,00.html
3. You must register and incorporate your business. There are two options:

• Doing Business As (DBA) - This is the cheapest way to get started. Fees are less than $100. http://mycorporation.intuit.com/business-formations/dba.jsp
• Corporation (Inc, LLC) - This option removes the liability from you and places it on the corporation. Fees are approximately $350.

Testimonial

Lynn Mitchell is one of the nurses we work with that works as an independent contractor. Here is what Lynn has to say about working as a 1099:

"I've been incorporated for 6 years. Believe me, businesses get the tax breaks and many other benefits that individuals don't. I have many business credit accounts, lines of credit, special offers, etc. I even bought a new car in the business name. With all the deductions available my taxes have been oh so low it's wonderful. This is a win-win situation."