Most PAs are W2 employees and never think about anything else. Leanne Hahn is here to explain the other option.

Working 1099 means you're an independent contractor instead of an employee. You pick up shifts, you set more of your own schedule, and you have a lot more control over what your career looks like. You also handle your own taxes, your own benefits, and your own record-keeping, which is the part nobody mentions in the recruiting pitch.

Leanne walks through how it actually works and what you need in place before you go this route. She's not selling it as better - she's explaining the tradeoffs so you can decide for yourself down the road.

This is a later-career topic for most listeners, but knowing this option exists changes how you think about your first job.

What we talk about:

• What 1099 contracting means for a PA
• Flexibility and schedule control
• Taxes and record-keeping responsibilities
• What you give up compared to a W2 job
• Getting set up before you take your first contract
• Who this path tends to work well for

Resources:

Free resume download: https://www.thepaplatform.com/services/free-resume-download

Pre-PA counseling: https://www.thepaplatform.com/services/pre-pa-counseling

PA Program Map: https://www.thepaplatform.com/pa-platform-map

Free application timeline: https://www.thepaplatform.com/services/free-application-timeline

Mentioned in this episode:

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Welcome to episode 88.

Did you know that PAs can be their own bosses?

Leanne Hahn is back to explain it to us.

Alright, let's get to it.

Welcome to the Pre PA Club podcast.

If you want to learn how to become a physician assistant, you're in the right place.

I'm your host, Savannah Perry.

Let's get to it.

Hey guys, first of all, thank you so, so much for taking your time to tune into the Pre PA Club podcast.

If we've never met before, I'm Savannah.

I am a dermatology PA as well as a Pre PA coach at the PA Platform and the host of this podcast.

We're going on almost two years in the fall now, which is crazy.

But thank you so much for tuning in.

If you haven't already, go ahead and subscribe on itunes just to make sure you don't miss out on any episodes and then leave us a review.

I may start reading some reviews again on the podcast in the next few weeks, so I would love for you to just let me know what you're enjoying, what you'd like to hear about next, who you'd like for me to interview, and we can keep this thing going.

So I'm always here if there's any issues.

You guys can email or reach out on Instagram, the PA platform.

But again, thank you so, so much for following along.

Today's episode is a little different, so if you remember back from episode 75, I introduced you to Leanne Hahn.

Leanne also helps other PAs get set up in this manner through her business, Advanced Practice Provider Solutions.

I'll link to all of that in the description.

This isn't something I knew about and I've been a PA for five years now.

So before you jump into a career, it can be helpful to really understand your options.

So this may be one that you listen to or mark for later on once you're getting ready to actually look at jobs.

And it is a little bit long because I wanted her to go through kind of what this looks like, why you would do it and then how you actually do it practically.

I'm very grateful to Leanne for sharing her advice and expertise with us.

And if you enjoyed the series from episodes 80 to 83, that was also Leanne when we talked about, you know, interviews, resumes, how to things you need to know for getting a job.

But anyway, so we will jump into today's episode and as always, you can contact Leanne as well if you have any questions about this.

There is a video with a presentation on YouTube.

So if you go to YouTube.com the PA platform, you'll be able to kind of follow along a little bit better if you prefer that.

And then we will be here if you need us.

Now, I do want to mention a couple things.

So my PA resource, if you are applying to PA School, it is, it's getting time to submit.

So there's still time.

It's almost June and you know, if you're still struggling with your personal statement, there is resources out there to help you.

And my PA Resource is one of those.

I do edit for them and they focus specifically on the PA School personal statement essay.

You can use the code Pre PA Club for a discount there if that's something that you are needing help with.

And then if you're getting ready to start PA school, let's say the fall, check out paschool prep.com and that's to help you really refresh on your anatomy, physiology, med terms and take away some of the stress of that initial first semester where you're trying to adjust to PA school and how intense it is.

I can't even explain, you know, well, how much of a transition it is from undergrad to PA school.

It's a big difference.

So anything you can do to kind of help get a leg up, I say do it.

Let me know if you have questions about that.

And you can use the same discount code there as well.

You can also use Pre PA Club at the PA Platform.

And now that we're getting into interview season, I am seeing interview invites go out, y'.

All.

So if you need help with interviews, don't Forget about the PA School Interview Guide, which is on the PA platform at thepaplatform.com book or it's on Amazon and that link is in the description as well.

And then we do have our awesome coaches who are available to do mock interviews as well.

So lots of resources for you.

There's a lot of videos out there, all kinds of stuff.

So there's help for whatever you need help with.

And if there's not.

Let me know and we'll make it happen.

And yeah, I think you'll enjoy it.

It's very interesting.

My name is Leanne Hahn.

Some of you may have listened to previous podcasts I did with Savannah, but if not, if you're new to this, I'll tell you a little bit about myself.

Again, my name is Lian Hahn.

I'm a practicing physician assistant.

Since then, I've opened up several of my own businesses.

One of them is called Advanced Practice Provider Solutions.

You can see there the website if you want to check it out.

EMC providers and my own personal website.

Just the things that I'm able to write off look a little bit different.

So an independent contractor is somebody who works on behalf of the owner or partner, such as the doctor's office or the doctor who receive a W9 tax statement and not a W2 tax statement.

And moving forward in the slideshow, I have some examples of what that looks like.

When you're working as an employee, you're generally filling out a form that's called W4, which most of you are probably familiar with, where you write the number of exemptions and everything on the sheet.

You'll put your name, your Social Security number, and then at the end of the year when it's time for taxes, you get a W2.

If you work as an independent contractor, you're going to get something that is called a W9.

So this is what a W4 looks like.

I think everybody's familiar with this as long as you've been an employee in the past.

And like I talked about, you would put in your personal information and number of exemptions, which is how much money they're going to Withhold.

At the end of the year, when you get your W2, this is what that looks like.

This is an example of somebody's W2.

And you'll see on here, this is the employer's name at the top and then the person's name at the bottom.

And then it shows how much they made and how much Social Security taxes, federal income taxes, Medicare, Medicaid were taken out from the money that this person made.

So this is what I do.

I work for a practice.

I fill out these forms, I get W2, go to my tax person, and he does it.

Yeah, I would say that most physician assistants are practicing as employees.

So this is really standard for everyone.

So if you're hired as an independent contractor or you start your own business and you're an independent contractor, you would complete a W9.

And this looks different than the other form because on here you're not putting a number of exemptions at the top.

You're going to be putting your business name, which would be your LLC or your S Corp. And you would check which one of these boxes that applies to you.

And you're actually going to put your ein and probably not your Social Security number on this form.

Because when you get your tax forms, you want it to be addressed to your business, not yourself, because otherwise you'd have to file it a little bit differently.

So at the end of the year, you would get one of these.

And the difference between this and the other form is you see that nowhere on here does it show Social Security was taken out.

Nowhere on here was Medicare, Medicaid stuff taken out.

Basically, if you're paid $50 an hour, you're getting 100% of that $50 an hour sent to you.

There's absolutely nothing being taken out of it, which is different.

Obviously, if you were told that you were getting $50 an hour as an employee, you would expect that you wouldn't be taking home exactly $50 an hour.

Times however many hours that you work.

There would be a little bit less money.

But you still pay taxes, right?

You do okay just a little bit differently.

You have the ability to write off different things that employees can't write off necessarily.

And so you're able to maximize your deductions.

And hopefully in the end, if you do it right, you would make more money than the employee would like.

It's actually the responsibility of the independent contractor to keep track of their own income.

And you want to keep track of that whatever way works for you.

For me, I keep it in an Excel sheet.

I know exactly how much I've been paid from each person.

So at the end of the year, there's no guessing game as far as how much money did I get from each client throughout the year that I worked for.

So what does it mean, tax wise?

Like I said, it means that the doctor or your employer, whomever that is, does not withhold federal, state income taxes or make payments to Social Security, unemployment or workers compensation on your behalf.

You are technically responsible for all of that, which sometimes scares people because they don't understand how that works.

And if you do get a payroll company to do this for you, then you don't even have to worry about it because it's automatically done.

So it's really not as scary as it looks.

So what are considered business expenses?

As an independent contractor, you can write off a lot of different things.

So I tried to make a nice list of things that you can write off as a physician assistant.

And that would be CME costs.

Travel, hotel, sometimes when you're out at a CME event that might include your meals, entertainment, your flight, professional magazines, journals, publications, even your apps up to date.

Apocrates.

Anything that you have to pay for that would be something that you utilize or would be educational, having to do with being a pa, you could write that off.

Scrubs, white coats, anything that would be considered a uniform.

Even if where you work you wear a polo and it has a logo on it, anything that's a uniform would be included there.

Any devices that you use for work, stethoscopes, otoscopes, ophthalmoscopes, anything, any products that you're using.

If you have to buy syringes or ear curettes, blades, anything like that would be included.

Pagers, cell phone, computers, iPad, any electronic devices that you use for work can be written off.

And I believe now things have changed where you can get a new one like every year.

Any fees that you're paying your accountant, sometimes your accountant fees can be well over $1,000 and you can write those off.

Payroll fees.

If you're hiring a company to do your payroll or if your accountant's doing your payroll, you can write those off as well.

Medical staff dues.

If you're on staff at several different hospitals, you're gonna have fees that come due every once in a while.

You can write those off.

Licensing fees, dea, your cell phone bill, your Internet bill, office space, even office space within your Own home.

They calculate it by like square footage, office space, renovations, business lunches, dinners, meetings, your malpractice policy, and any marketing materials, whether that's business cards, flyers, posters, your own website, whatever that might mean.

But there's a lot of other things, not even on this list, that could be expansive as far as the amount of write offs you can have.

So just so as an employee, so you're not expecting no one's going to pay for this for you.

So as an employee, like I get a CME budget and they pay for a white coat every year and my licenses and testing and all that.

So you're covering all of that from basically your salary that you're getting from them?

Okay.

Sometimes the client or whomever can determine whether or not they want to give you a stipend, just like a lump sum of money that you may use towards any of those things.

So it just depends.

You definitely won't get the same benefits as an employee because if you were, then you would be reclassified as an employee.

Right.

But there is a way to still get something.

Okay, so basically at the end of the year, when time comes, and your accountants doing your taxes, or if you decide to, which I don't recommend anybody that has an LLC or an S corp to do their own taxes, I highly recommend hiring a professional.

They're going to fill out things on a schedule C, and this is what that looks like.

And this is kind of where they delineate expenses.

And writing things off is on this schedule C. And just to be clear, I'm not an accountant.

I don't have an accounting degree.

But again, I don't pretend to be a chef, I don't pretend to be a mechanic, a plumber.

So I know at the end of the day, because I'm not an accountant, the best thing for me to do is to seek out their resources.

And I feel that when I hire an accountant, I'm able to find a lot more loopholes or write more things off than I would have had I been at home doing my own thing on TurboTax.

So that's the second page of a schedule.

So how do you know if you're being hired as an employee or an independent contractor?

So basically you just want to ask sometimes the terms may not be clear.

I've seen PAs hired as both.

You want to look at the contract, See, does it spell out that you're an employer, does it actually say that you're an independent contractor?

If you're not sure, there's somebody that should know within the company, whether that's HR, an office manager or doctor.

I think when people think of negotiations, they often just think about salary and what they're getting paid and not necessarily that they can negotiate language or terms of the contract or things other than salary.

And one of the things that sometimes I like to negotiate is being an independent contractor instead of being an employee.

So being an independent contractor doesn't eliminate the opportunity for some benefits.

There are some clients who may cover your malpractice or still give you paid time off, but it's generally not going to be the same as what an employee is getting.

It may look a little bit different.

However they decide to organize that, you definitely want to know who's responsible for paying the credentialing fees, licensing fees, are they reimbursing you?

Are they giving you a lump sum?

Do they expect you to pay for it?

And are you just going to write it off?

Can I ask you a question?

Sure.

Could I had.

I've been writing down questions.

Could someone be an independent contractor and a traditional employee?

Like could I at my job, I'm traditional employee, Could I go out and become an independent contractor elsewhere?

Yeah.

So I think that you see that a lot.

I think there's probably people out there that have heard there's PAs that work multiple jobs and sometimes what you'll see, which is, I guess the holy grail would be working as an employee at one place so that you get the benefits of being the employee and then doing a side job as an independent contractor.

So you have the ability to still do those write offs and utilize those loopholes while still dipping your hands in the employee pot.

So you kind of are juggling two things at the same time.

Okay.

The only time I would imagine something like that would be restricted is if you had a non compete that prevented you from doing any other work outside of where you currently are.

But that's a different situation and a contract dependent.

But listen to our past episodes for all that.

So basically for you to get to 99, your employer does not exercise control over your ability to perform a certain task.

If the worker has an established trade or business that they customarily engage in.

If the workers performing a task or a job that is outside of the functions of the business in question and they typically do not prevent you or restrict you from working other jobs.

And it does provide you some flexibility.

So I'm going to go into a little bit more detail about some examples of how those terms of being an independent contractor apply as being a pa, but a little bit more about flexibility.

You decide when you're going to take vacation, you decide when you want to work, and you decide maybe what malpractice you want or what 401k policy or retirement benefits that you're looking at do you want.

Life insurance, disability.

And you can choose the company you want to go with in the terms of what that looks like.

Where if you are an employee, you have to take what they're offering you, you don't have an option of what company in the terms of what that looks like.

Something I will say about flexibility if you're 100%.

1099 Although flexibility is really nice to decide when you want to take vacation and when you're working, I will say that if you're the person that starts saying no, that there's going to be other people who are saying yes.

And if you want to be a good business person, sometimes you have to be the yes person.

And if you don't want to lose clients in business, you have to have availability.

So I would be cautious with how much time you take off.

So another way to think about what being an independent contractor is like is that you're selling your services to a practice but you don't have any legal connection to the practice other than being the provider of services.

So I feel like that's broken down a little bit better.

Okay, so you still have a contract though?

Yes, you can have an offer letter or contract.

And actually with some people I just have a verbal agreement.

I don't have a contract.

We probably should, but that's a different story.

So some non medical examples to kind of give you a better picture would be if a business hires a plumber to fix their toilets once a month, that plumber could be a contractor.

If a clothing business is an at home seamstress and she's provided with the clothing and the patterns by the company, she's an employee because the company is providing her with the tools that she needs to do her job despite the fact that she's doing it at home.

They're usually hired for something that's a term somebody's leaving on maternity leave for the next three or four months, or we need coverage every Monday and Tuesday for a little while, or we just want to use you per diem.

So that varies.

It's usually like a temporary coverage and not somebody that would be full time or a physician contacts you to periodically round on their patients in the hospital.

As a per diem, this is pretty similar to what I do.

So for infectious disease, for example, I have a couple different doctors that I've been covering over the last several years and I will kind of follow up with them once a week.

Hey, what days did you need help this week?

Sometimes it's none.

Sometimes they'll say, hey, do you want to cover this weekend?

Or hey, I'm going on vacation on these days, can you see my patients on these days?

And that's kind of how we coordinate.

It's not a set schedule, it's very random and sometimes it's very last minute.

The good thing is that I decide when I'm going to show up in the hospital and round on the patients.

However, I recognize as a physician assistant that there are certain hours that would be appropriate for me to come round on the patients.

And so being a professional and recognizing what those are, I do show up at reasonable hours.

So I have the ability to show up when I want, leave when I want.

If I wanted to see five patients at 9 in the morning and then I leave for lunch with a colleague and then I come back and finish rounding, I can do that.

And then when I'm done seeing my patients, I can go home.

I'm not obligated to staying somewhere on a shift.

My physician is still available for me to consult with them or for me to ask questions or discuss cases.

It doesn't mean that I'm working independently because as of right now, we're not independent providers, we're dependent providers.

Being an independent contractor just has to do with my taxes and how I'm being paid.

It doesn't have to do with working independently.

So I still act as any normal physician assistant would.

I'm just paid a little differently.

So the physician assistant, the doctor's not telling me this is how you need to do this and I want you to show up at this time and kind of telling me what to do.

They're not telling me how to write my notes or do my job, do what I do, and they continue to contract me on an as needed basis.

So does he call you mostly if he's going out of town or if he's slammed and has a ton of patience, like, where do you come in?

And he goes, I need Leanne Tuesday.

Basically, most of the work that I get is if you're willing to do things that other people don't want to do, you're always going to have work, right?

So a lot of my work is weekends and nights.

And then when people go on vacations and holidays, I would say those are the busiest times for me.

Where I find that I would get the most work during the week is usually the doctors I work with are very busy at other facilities, so they want me to cover one so that they can focus on the others.

It just kind of varies, but I'd say for the most part I'm covering weekends, holidays and vacations, and then during the week as needed, depending on how busy their census is.

So other examples of a medical independent contractor would be people that are doing call coverage positions.

I know this is like kind of a relatively new concept, but I know like UnitedHealth, TeamHealth, there's a lot of different companies that actually use remote providers and even different hospitalist groups where they have PAs or nurse practitioners who work from home to do call coverage.

And basically what you're doing is you are doing all of the emergency room admissions, you're answering floor calls from nurses, or maybe you're covering skilled nursing facilities or als and you're taking all the calls from them.

Basically, it's not considered important for daily workflow in the business, which is something else that the IRS looks at, because the physicians or other advanced practice practitioners are providing rounds on the patients during the day.

If you're covering at night.

So what you're doing isn't really having to do with their normal daily workflow.

You're just covering the call because again, this is something most people don't want to do.

So it's easy to cover call for people because nobody wants to stay up all night.

So you technically decide your own schedule.

So often with these call coverage positions, it's like seven on, seven off, or some combination of that.

And between the two different providers or multiple providers, they organize a schedule between themselves.

And you could say, hey, I'm going on vacation on these days.

Can you cover?

Or I can't do this day.

And they kind of cross cover each other in whatever way that looks like generally you cover your own malpractice, or sometimes the client will cover your malpractice and then you deduct costs Associated with this type of work would be maybe your computer, your phone, home, office space, things like that that we discussed before.

Another really big example helps, if I could spell example there at the top, but it would be a surgical first assist.

So a lot of people don't realize that you can actually be in a surgical first assist as an independent contractor and you can bill for the procedures on your own.

People that I know that are doing this, they usually have a little bit of surgical experience, although it's not impossible to do it straight out of school.

And once they have experience, then they've been exposed to different doctors kind of within our clique or the hospitals.

They know people they've networked and then they kind of go out on their own, they open up an LLC or an S corp, they call it whatever they want to call it, and then they start promoting their services to different doctors.

And the benefit of that is that the doctor is getting a free surgical birth assist and you are billing for your assisting in the procedure.

So the doctors like it because they're getting free help and you like it because you're making a lot more money than you would being employed by somebody.

So I think what people don't realize is that if you're employed by a company that hires you as a surgical first assistant, they'll generally pay you say, $50 to $70 an hour.

Well, your one or two hour procedure, whatever that is, when they bill for it, they're getting anywhere from probably $300 upwards to $1,000 plus depending on the procedure and the insurance company.

Instead of you getting your hundred dollars for the two hours that you were there, you could have made several hundred dollars instead doing this on your own.

So that's the advantage of doing your own billing and being an independent contractor as a surgical first assist, is that the income is exponential compared to what you're getting paid.

Being employed by somebody that is taking your money as being a surgical pharmaceut doing the billing for you.

That's really interesting.

So often people I know that are surgical for cyst, they clearly make their own schedule because they know I have a bariatric surgery scheduled at 8 and they have to give some buffer time because sometimes it may run over or behind and then they'll do another procedure at like one and it'll be with a plastic surgeon or somebody completely different.

And they hop around hospitals and they hop doctors or they find a consistent doctor that they work with regularly, and they just kind of have this joint relationship where they provide the surgical assist services, but they bill on their own and the doctor doesn't.

So it's beneficial to both parties.

But oftentimes, if you work in a surgical setting, say, like, I used to do bariatric surgery and I did office, I did hospital rounds, and I did surgery.

Not only is that doctor making money off of me seeing patients in the office or rounding up the patients in the hospital, but he's also billing for my first assistant services and making a lot of money off of me doing that.

So I think it's important to know your worth.

Okay, so I had a question.

So if somebody wanted to do that and you said they're billing on their own, can that be done with any type of insurance?

So there is insurances where right now, not all PAs are allowed to directly bill.

It's Medicare.

That's what I was thinking.

There's something there submitted, a bill or a law or something that we're trying to pass that allows PAs to do direct billing with Medicare.

We are the only providers right now that are not doing direct billing with Medicare.

Even nurse practitioners are allowed to.

So for you to do a surgery that was Medicare and bill them, you actually have to have a doctor that is employed by your company.

Whether it's like 1%, it doesn't mean you have to pay them, but they just have to be part of the company as whatever percentage.

And then you would bill under them to get money for that.

Or the surgical pharmacist are just flat out turning down Medicare cases so that they don't have to bill them, or they'll have the doctor pay them a flat rate of whatever they negotiate between the two of them to do Medicare cases.

And then the doctor will just bill it.

Okay.

And that doctor would still be their supervising physician.

Correct.

Each time that a surgical prosthesis goes into a case, that surgeon that they're with is technically their supervising physician.

As they bounce around from case to case and it changes, each person would change roles.

So there is something called being reclassified.

So you really have to be careful of are you an employee or are you an independent contractor in the eyes of the irs?

So businesses can incur penalties and fines if they misclassify somebody.

You have to be careful of how much control the employer or client has over your work.

And there's different employment and labor laws that apply to someone who's an independent contractor versus an employee.

So again, how does the IRS look at that?

They want to know whether or not the employer has control over the work you're doing.

You know, do they have control over how you're doing your job?

Do they provide training to you?

Is the employer making you work set hours and schedules?

Like you're going to work Monday through Friday, 40 hours.

These are the days you work.

This is when you're going to be at this place.

That sounds a lot like an employee to me.

Whether the employer has financial control over the worker or whether the worker is invested in your own business, you have other clients and you're not dependent on the employer.

Like I mentioned, I got many different clients, which are basically just different doctors that contact me for per diem coverage.

So it's not like I have one big nest egg that I'm completely reliant on.

I have a lot of different income sources, but that may look different for a lot of different people.

I would imagine somebody like a surgical assist, for example, has a lot of different doctors that they may assist and that may contact them for help.

So they also look at the relationship between the parties.

Is the contractor working on projects?

For example, like I said, a woman that's on maternity leave and leaving for four months, that would be your project that you're doing.

It's not an indefinite term like an employee until you guys terminate your contract.

So employer penalties.

If you are classified wrong, the IRS might make them pay back payroll taxes, workers compensation, overtime and other things.

Penalties and interest.

Penalties can be as low as 20%, which is a lot to me.

But of the FICA, that should have been withheld in 1.5% of wages.

Okay, one question.

So let's use my job as an example.

So I have a set schedule Monday through Thursday that I come in.

I'm supposed to be there around 8, get there at 8:15 and have a set schedule of patients.

So I'm an employee.

For me to become an independent contractor, I would have to say, okay, so I'm gonna come in, work the days that I want to work and set my own schedule and you guys don't have to give me benefits.

Basically you would have control over when you come and go out of the office.

You would have control of your schedule and tell people like, I'm going on vacation on these days or I'm not available after three and things like that.

You would have more flexibility in what your day to day looks like.

And it may not even work in your situation because yours is considered like indefinite.

Right.

A lot of people that are hired that way.

And is the IRS actually going to find out?

Are they going to get in trouble?

I would say in most cases, no.

I don't think that people are finding out.

I see contracts like that all the time when we do contract reviews through my company.

Is it possible?

Of course, anything's possible.

Just like you getting sued for malpractice.

It's not a matter of if, it's a matter of when.

So I think it's just being really cautious and careful about what you're signing and understanding what all those things mean.

Yeah.

So for traditional, like a traditional job like mine, it's not exactly practical, but.

Huh.

I said it's not super kosher, but I've seen it.

Yeah.

So does it work in every state?

It actually doesn't.

I, I don't remember which state it was exactly.

So there are some states, I'm not familiar with how many, but I don't think it.

I would say it's a majority.

And I do hope that those associations are actively working on changing that.

So something to look into.

California, I know, recently made some changes to the independent contractor laws and the Supreme Court changed the guidelines on what identifies somebody who's an independent contractor.

So there are changes that are happening in each individual state in regards to independent contractor.

So it is important to kind of be up to date with your state law or check in with an accountant or an attorney just to make sure that you can do that.

So how they're getting around that or if they're even legally allowed to do that, I don't know.

I'm not an attorney.

But there are people doing it and it doesn't mean that it's right.

And I would say that this shouldn't be a huge factor in your job hunt at all.

Again, at the end of the day, it just has to do with much money is on your paycheck and how you're being taxed.

1099 Might be problematic for you if you're not very good at being organized because it does require for you to keep receipts and keep track of income and things like that.

So at the end of the year when you do your taxes that you can maximize the deductions and not owe a ton of money.

Some people would say that that's about 10%.

As somebody who is an employee, I would say that you would still make more if you did it the right way because of the amount of deductions that you're allowed to have.

And actually the new pass through law that was passed by Donald Trump, if people are more interested in that, I would say do some research because I'm not going to go into that more in depth.

But it was something that was passed.

Does help people that have an LLC or their own business write off a little bit more money than we were pass through.

You don't have to.

And what happens is they lose a lot of the benefits of the loopholes and the pass through.

They would not be able to do any of that.

And they don't get to maximize their deductions the way that somebody who actually has a business would not.

So I would call that not doing it.

Right.

So you want to do it right and maximize your income potential.

You definitely want to set up an LLC or an S Corp, which can be done by an accountant, an attorney, or there's definitely business consultants that can do it.

My company does it, you can do it yourself.

But if you're not comfortable with doing it, I definitely recommend consulting a professional.

Is there a better option between LLC and S Corp in your opinion?

So my understanding is that the only difference between the two has to do with your legal liability and having to do with protections.

And so my accountant advised me to have an LLC and then file as an S Corp. You're able to do that.

Again, I'm not an accountant, so I don't really understand how that works behind the scenes.

But for my situation, he says that that was the best case scenario to have the protections of being an llc, but then filing as an S Corp to get the tax benefits of doing that.

So there is a way to do that.

I have seen some people be an S Corp instead of an llc.

I can't speak to why their accountant might have recommended that, but definitely something to sit down with because it may be situational.

Okay.

So I think some things that people don't recognize about working as an independent contractor is that you can actually open up your own retirement.

You can open up your own 401k.

And what's really interesting about it is that the 401k can be under your business's name.

So your company has this 401k policy and you actually employ yourself under the business.

So you can contribute as the business to the fund and as the employee.

So you actually maximize how much you're able to contribute to a retirement fund by doing this.

Because you're kind of able to double dip a little bit, really high max, right?

Correct.

Or you can do like an individual one, which is called a SEP ira.

The best person to contact to decide what's going to financially be best in each individual situation might be a financial advisor.

Specifically somebody who maybe who has a CFP certification.

These people are very well versed in this and would definitely be able to set you up with this and guide you in the right direction.

You can deduct more items on your taxes than an employee would.

The employer portion of your payroll taxes is deductible.

The business expenses like we discussed before, and then the new pass through deduction that I talked to you guys about, which is a tax savings that was passed by Donald Trump specifically for people who have their own businesses.

So, yeah, this may Be.

I need.

I mean, we may need to get.

An accountant on here next, but.

Yeah, I've done it.

Okay.

I've been an employee, done everything.

Leanne.

Yeah.

So basically what I did was my employer did offer a 401k, but their contributions to it was not very good.

So it almost didn't make sense for me to have it because some people, employers will offer a 401k plan, but they don't even match anything.

So at the end of the day, it's like, okay, great, I have something I can contribute to.

So if they're not providing you with, like a significant match and all they're offering you is the plan, I would say if you are an employee and an independent contractor, open up your own, because there's no point in utilizing that benefit with them if it's something that you can maximize better on your own.

Gotcha.

I think it's just you don't want to contribute to both.

It's better.

Like you wouldn't want to be contributing to the employee one while doing your own.

It definitely I would keep it like one or the other.

Gotcha.

Okay.

So like I explained, you can have your own business as your LLC or S Corp and employ yourself.

So what that looks like is I have my company and I'm an employee of my own company, so I'm paying myself a salary as a W2.

Typically, it's recommended that you pay yourself a lower salary than the total income of what's coming into the business.

So if a business is generating 400,000, you don't want to pay yourself 400,000.

Maybe you'll pay yourself 70,000 and you're going to get taxed like a normal employee would on that 70,000, and you're going to get the same forms that an employee would at the end of the year and fill out all the deductions and things like you would being an employee.

And so at the end of the year, you're going to be doing business taxes and employee taxes, individual taxes.

So you have both.

And this is where it gets kind of complicated.

And it's like, I'm not really sure I would recommend you doing this yourself on TurboTax.

You probably should get an accountant because they're going to help you do both your individual and Your business taxes.

So then you say, okay, well, if I'm only paying myself $70,000 and my company made 400,000, how do I get access to the rest of what's sitting in my bank account?

And basically you would pay those out as profit sharing or dividends.

Right now profit sharing is the better way to do it based on the pass through deduction that was passed.

It just depends.

I would consult with an accountant as far as what they think is the better way to do it.

And so each month you can decide to send yourself an extra $10,000 every two weeks or once a month or however you want to do that in whatever amount you want to do it.

You decide.

And so it just comes through as profit sharing or dividends instead of your salary, it just looks different.

So you're still getting the money.

It's just coming a different method.

Okay, so is that in my head,.

Basically you're putting yourself on a payroll.

So most people are familiar with a company like adp.

So if ADP is doing your payroll, I'm going to tell ADP when I log into my ADP account, pay Leanne $70,000.

So every two weeks, it's going to take out whatever my salary would be and the taxes, and I'm going to see that money disappear from my business account.

And then magically, after all the taxes are taken out, the remainder of the money is going to plop in my personal account, just like it would if you had a direct deposit from your regular job.

Except I can see that money because the job is my company.

So I know when it's coming out of the business account and then going into my personal account.

And then I will set up something where it moves, say an extra $10,000 every two weeks from my business account to my personal account.

Except it's labeled profit sharing.

If I don't know what profit sharing.

Is, basically it's just saying, like the extra money that the company's making after they've paid expenses is profits.

And as an employee or owner of the business, you're eligible for profit sharing.

So you're eligible to get a piece of that pie that's left over after the expenses are paid.

It's just.

But it's not considered salary.

Nope, it's taxed differently.

Okay, cool.

So that's why you kind of do a little bit of both.

And the reason you want payroll and paying yourself a salary is more so to help avoid being audited and things like that.

So it's a good idea to do that.

So there's kind of a paper trail of you being an employee and taxes being taken out.

That's kind of the purpose of that.

And then the profit sharing has to do more with utilizing the benefit of the pass through law that came through so that you pay less on that money.

So a question I believe that you were sent was how much more does the average PA make as a contractor versus a W2 employee?

And I would say that that varies greatly depending on your ability to manage your finances and stay organized.

I had to pay so much in taxes and I owed all this money.

They didn't maximize their deductions, they weren't saving receipts.

They don't understand I can write off toilet paper and paper towels for my office.

I mean, simple things like that that people aren't writing off at the end of the day, that would have saved them many thousands of dollars and they might have made out better as a independent contractor than an employee.

So I think it's all about doing it right and how well do you do it?

And I think you'll do it better with an accountant.

So having a good account is going to help you maximize your write offs, reduce the amount of money that you owe at the end of the year.

Like I said, I 100% would not do your own taxes on TurboTax.

If you're an independent contractor, you need a professional that's going to come up with ideas and kind of pick your brain for more write offs that maybe you wouldn't have thought of on your own.

So another question that you were asked was, how do you even start?

So this question was asked like five times.

This looks different for everybody.

So you might actually be interviewing and then the job offer that you're given is an independent contractor contract.

You could start your own business and then you would automatically be an independent contractor.

So when I started Advanced Practice Provider Solutions, which has nothing to do with me clinically practicing as a pa, just me Owning my business, doing resumes and cover letters and personal statements and contract review and negotiation and all the things that we offer on our website, that in itself is a business.

And so me running that business, the income that comes through there, makes me an independent contractor.

So just owning your own business in any aspect, anytime you have an LLC for something, whether it's something you created on your own or something you're being hired for, you can be an independent contractor.

I was an independent contractor when I was the rock star girl or the Budweiser girl, like working at the bars in college.

Right.

And for me, I created advanced practice provider solutions.

So sometimes it comes up that way where you review an employee contract and you say, I'm not really utilizing any of these benefits and this person's willing to let me be an independent contractor.

So there's somebody that can check this for you.

You can check it yourself, come up with a name, see if it's taken.

If it's not taken, then you can take it.

And once you have the name officially, then you will get an EIN number, which is your employer identification number.

That's basically the same thing as your Social Security number for your business.

It identifies your business and that's what you put on your tax forms.

Once you have that name, you're going to want to open up a business checking account.

Just to keep a ledger.

And all the expenses that you pay for your business, whether that's your cell phone bill or the phone itself, a computer, the toilet paper or paper towels for your office has to come from this checking account.

You may open up a business credit card where you charge those things too for the purposes of getting points, and then you'll pay it off from the business checking.

That's okay, too.

And that your LLC and S Corp, that's created through your state, correct?

Yeah, they're individual states.

We'll have them set up.

And usually accountants can do them, attorneys can do them, business consultants, My company will set them up in any state.

You can do it yourself.

But some of the language and paperwork might get kind of confusing.

So you got to decide if you want to spend the time going through that or if you'd rather just have somebody else do it that knows what they're doing.

You definitely want to make a connection with an accountant, if you don't already have one.

Who's going to be doing your taxes at the end of the year?

I have accountants that I can refer for any state if anyone's looking for one.

And then you probably want to set up payroll.

Okay.

Can I ask a question?

Yeah.

Okay.

Well, first of all, at the beginning you mentioned sometimes you kind of have to chase down these forms or kind of do them yourself.

Is that something that you just found working with different hospitals and people?

Like, they just don't.

Most people that are familiar with employing independent contractors have these forms ready to go.

Otherwise, I just keep a blank copy from the IRS with me, and I'll just submit it to whoever my client or doctor is going to be working under so that they have what they need from me to send me my tax forms at the end of the year.

Okay.

And then when you so taxes, you may have just answered this.

But do you do them, like, monthly, quarterly, or just at the end of the year?

You just do it all?

But for me, I have probably more than 15, and we spend an expansive amount of time just doing my taxes.

So it takes me a while to prepare for that day.

But if you stay organized, it'll be okay.

So let's see.

We talked about that.

So sending invoices.

Something that they say that you should do as an independent contractor is send invoices.

So if today I rounded on 20 patients in a hospital for whoever, I'm going to send them an Excel sheet, whether it's every day, every week, once a month, that basically says, here's the date, here's the number of patients I saw, and here's how much you owe me.

And you can do that through QuickBooks.

You can send it through Excel.

You just send a simple email.

Just something that shows that you're sending invoices.

Kind of helps you keep track of what people owe you and just understanding how much income you're getting from different clients.

You want to save all of your receipts.

And just to show you guys an example of that, I have how I save receipts, which is probably not the best method, but I'm very much like a paper person, not super electronic.

Yet.

This is gonna be quite entertaining.

So every single year, I buy one of these.

This is my organization of all my receipts and everything throughout the year.

Your account.

Right.

So there is an app.

It's called Neat or Neat Receipts.

That's the most popular one that I'm aware of.

But I'm sure there's some competitor.

This is called Shoebox.

Okay.

I haven't heard of them, but they're probably good.

There's different apps or companies where you can actually scan the receipt from your phone, and it's going to read and identify different things.

You may be able to write off or organize it for you on a program on your computer or on your phone, so that when you file taxes at the end of the year, it's a lot easier to find things you can write off and organize things by different categories.

So I definitely recommend getting one of those programs.

And although those programs cost money, you can write off the cost of those programs.

So that's what's really neat about that as well.

And same thing with invoices.

If you use a program to send invoices, you can write off the cost of that program.

Again, decide if you're going to set up benefits.

Once you become an independent contractor, get in touch with the financial advisor to set up your disability, your life insurance, your retirement and 401.

If you decide that you want those things, consider setting up a website to promote yourself or have a professional presence.

You can deduct the cost of the website as well.

Maybe you want to have a logo created for your business.

Find a graphic designer, you can write that off as well.

Market yourself.

Get business cards, flyers, mailers, go to networking events, create an event, have a mixer and invite people, anything that you want.

And you can write those things off.

And then you want to consider like for example, if you do surgical versus this, do you want to hire a biller that's going to do your billing for you and then if not, is the client going to be doing the billing for your services?

So in my situation, when I've round on patients, I don't do my own billing.

I'm given a flat rate per patient and the doctor does the billing, surgical first assist.

Most of them are doing their own billing.

The doctor is not billing for them.

So there's different things in different situations.

You also want to decide if you want to purchase a business line, whether that's a separate phone or just a business number that gets forwarded to your phone.

You can also deduct the expenses for that and whether or not you're going to require a fax machine, which you could also deduct the expenses for.

So questions that I hope were answered from my previous slides that I know that you were sent was what was an independent contractor and why would a PA want to be an independent contractor?

And really that just has to do with maximizing your deductions and at the end of the day getting more money back and in your pocket and having flexibility.

So I say get you someone who can do both.

And we kind of talked about this.

The best of both worlds is to have some of your income as an employee and some of it as an independent contractor.

But you have your employer provide your benefits and the employer portion of the Social Security taxes.

So if you can figure out a way to be an employee and do side jobs as an independent Contractor, that really would be the holy grail of maximizing your tax benefits and write offs at the end of the day.

So if there's anything else I didn't cover, I'm sure you're going to ask me right now or anybody else that thinks of something that we don't talk about.

You can check out my website.

And then you can also contact me personally with any questions.

So that's something to consider.

Okay.

And I'll link to that blog post in the description too.

So.

Okay, my questions.

Well, first of all, I've heard I have a friend who's an accountant.

Another day at my book club we were talking about this because some of the people there own businesses.

And I've always heard that our accountants will say like, oh, you need to spend more on your business, spend more on your business.

But to me that seems counterintuitive because then you're just spending money to spend it.

So.

But you kind of said the same thing.

Like, I guess it's for the write off purposes.

It is.

And then I would get creative about what things you're already buying that technically could be business expenses that maybe you're not thinking about.

Like laundry detergent.

You need laundry detergent to clean your clothes.

Are you getting dry cleaning?

Like I said, are you getting toilet paper, paper towel?

Did you just renovate your office space in your home for some reason?

Anything like that?

There's a lot of things that people don't generally think of.

If I'm going out to lunch with a friend of mine that's a doctor and I'm talking to him about what I do in my business, that is something I can write off.

That's a business meeting.

So think about business meetings you're having with people or items that you're purchasing that you, you may be misclassifying on the individual.

That could be business.

And I think an accountant could get more specific as far as what that looks like.

Some people walking a finer line than others.

So it really just depends.

Okay.

And you may have spoken to this too.

How as an independent contractor, do people get paid?

I heard you say by patient.

Is it hourly, like by day?

What can that look like?

Looks like a thousand different things.

Whatever you want it to be.

Yeah.

You can get paid by patient, you can get paid hourly, you can get paid a flat fee, you get paid whatever you're billing and the insurance company reimburses you.

So what I would recommend is if you are stuck in an office, if you're an independent contractor in an urgent care family medicine, in anything that requires you to be in an office and you have to be there between certain hours, whether that's a temp position or whatever that looks like.

If you are stuck somewhere, you should be hourly because you can't control the patients that are coming in and out of the door.

You're not doing their marketing for them.

You don't know if somebody's gonna cancel.

So doing it by patient may not make sense because you don't know that there's not going to be a lull of hours where you're sitting there not doing anything and you still want to get paid for being there.

So sometimes in an office setting, per patient doesn't make the most sense.

I have seen some situations where you're getting hourly and then you are compensated per patient in addition, that if it does get over a certain amount and you're busy.

So that may be something to consider.

And then if you are hospital based and you're doing patient rounds, whether that's in an alf, a snf ltch, big hospital, anything like that, I would definitely say recommend doing per patient, not hourly because you can control the rate that you're rounding on the patients, how quickly you see them and when you're coming and going from those facilities.

So if you can round on 20 patients in three or four hours, that sounds a lot better to me to get paid for 20 patients than to get paid for three or four hours.

Because if you're making, you know, $30 a patient versus getting paid $60 an hour, you can see where it financially wouldn't make sense to get paid hourly in those types of situations where maybe you're rounding.

If you're doing surgery and you're a surgical prosthesis and you want to start your own surgical prosthesis company, 100% you want to bill on your own, you're going to make a lot more money billing out those services yourself.

You don't want to let anyone else bill them out for you.

You don't want to get paid hourly or a flat fee unless you are working to say something like Medicare or maybe a surgical procedure that isn't reimbursed by certain companies.

I know that there's some hand procedures that don't technically require a first assist according to insurance companies.

So they will not reimburse for those procedures.

And so if the Surgeon still wants you to come in on a procedure you wouldn't normally be reimbursed for.

You may want to ask that surgeon or negotiate with them a flat fee or some sort of hourly.

Okay, cool.

Have you found that certain specialties work better or do you feel like any specialty area this is kind of possible?

I think any specialty it's possible.

I found in particular, it's better for, obviously, surgical first assist.

I've seen it in ers.

I have seen it obviously in the hospital.

Works really well.

And then anybody that's locum, ten of them.

Okay, cool.

Do you think this is something that a new grad could do or like you mentioned that there's no training involved?

Do you feel like someone needs to kind of have some experience and background before they jump in or.

I think it depends on what you're doing.

Be able to just, like, say, jump in an urgent care or a family practice and not really need much training, although obviously any training is recommended at any point in a PA's career.

If you have experience and you can just jump into something and no one really needs to show you anything.

Great.

I think, you know, for me, it's been really beneficial being credentialed at multiple hospitals because I'm familiar already with all the different computer systems and EMRs that we use.

So nobody needs to train me how to use the computers.

Maybe they need to show me, like, how they like to do things.

Because I feel like as a physician assistant, I consider myself an extender of the physician services.

So I do like to replicate whomever my supervising physician is and the way that they like to do things when I'm seeing patients.

So I may spend some time shadowing, maybe not training with them to kind of gauge what that looks like and how they like to do things or just utilize them by calling them or texting them and asking them questions.

Then eventually you'll learn how they like to do things.

Okay.

I think you've given us a really.

Great kind of overview to end just since we talked about all the kind of good things and positive.

And you've made it sound a lot more clear than what I thought.

But what would you say are the downsides or what scares people away besides just not knowing what to do?

I mean, why wouldn't someone want to do this?

I think the main reasons people aren't independent contractors is one, they don't know what it is.

They don't understand how it works.

And they are told that you owe all these taxes at the end of the year.

You have to pay your own Social Security and all these other taxes that the employer normally pays.

And I think that scares people away because they think that they're losing money, but they don't realize, like on the back end, you're actually gaining money if you do it correctly.

So I think if you are afraid of like saving receipts, you think you're just not organized.

You don't have like a very good business sense.

Maybe it's not something that you want to dive into, because if you're an employee, you don't have to worry about any of that stuff.

You know, you just kind of go in, you do your job, and you go home.

For me, anytime I'm getting a receipt for something, I'm saving it and I'm organizing it.

And I'm constantly thinking about, can I write this off or can I not write this off?

I'll make sure I get the receipt.

So every day for me and everything I'm doing where it involves me getting a receipt, I'm constantly thinking about whether or not it's something that involves a write off.

So you just got to be really careful because I know plenty of people that I've tried to help start out as independent contractors, and they have say what would be considered a business meeting with somebody and they'll say, oh, did you get the receipt?

Oh, no, I forgot.

So a lot of times people are forgetting because it's not a habit for them.

Okay, cool.

Well, I think we've covered it.

All right.

If anyone has any questions, definitely reach out to me, let me know and I'll respond to your emails as quickly as I can.

Sam.