1) How does independent contracting work?
As a professional RN or NP you hold a license which allows you to practice as an independent professional meaning you have a body of knowledge , standards of practice and expected norms which allow you to practice as an independent contractor or an employee. Much like physicians, accountants, lawyers, etc you have a choice to be employed or to broker your services through an agency and operate business wise as a self employed professional, LLC, or corporation.
2) If all nurses and nurse practitioners can work as IC’s (independent contractors) why don't more nurses choose this option?
Many nurses have never been educated regarding the business advantages of being an IC so they simply do not know if the option is good for them. Historically, most nurses were employees and most physicians were independent. The Times are Changing! Now, you see many physicians in employee options (some happy and some not) and nurses seeking more professional options, multi-system experiences and financial freedom. Especially now, given the economic down turn, independent contractor advantages are worth examining.
3) Is independent contracting legal?
Yes! The United States thrives and supports small business and sole practitioners/proprietors account for much of the nations' jobs. As long as an independent contractor reports income properly there is no dispute with our government regarding operating as an IC.
4) Why are nurses who function as ICs allowed business deductions that employed Nurses are not?
The rules for business professionals who chose to work as ICs is the same for all professionals i.e. physicians, lawyers, accountant etc. The key is not that you’re a nurse but that you are a nurse in business. Business owners, because they tend to contribute more to the economy, are allowed certain deductions to support their business growth, development, reinvestment (education), business owner benefits, proper accounting, legal assistance, insurance (protection), retirement and marketing. The allowable deductions and rules for what is normal and customary have been developed over a long history to help develop business. Your accountant and other business owners are very familiar with what expense are allowable.
5) How do these business expenses help me?
If you are currently working as an employee, you may have many expenses relative to keeping your professional skills current and your assets protected as well as travel expenses, home office expenses, professional functions, memberships, publications, etc. that are not deductible as an employee. As a business owner, these expenses become deductions thereby reducing your taxable income (AGI) ...and your taxes and social security or other taxes such as Medicare contributions are calculated based on income.
In addition, if you are married, your adjusted income, as a business person, is now the number used for calculating your joint tax return and you and your spouse now apply all your "family" allowable deductions such as child care, education funds, interest deduction, IRAs etc.
6) Are my expenses as an IC for Social Security and Medicare higher than I pay as an employee?
The taxable amount does goes up because right now your employer and you pay the same amount into Social Security (5.6%). When you become an IC, you do pay both parts BUT on the adjusted number so it normally works out to be about the same. As you make more money, you could pay more unless you also set up special retirement plans only available to the self employed.
7) This sounds like a lot of work , are Nurses really successful when they convert to an IC?
The answer is yes! Being self employed and the opportunities to be self employed have grown vastly. Everyone is trying to grow wealth and keep more of what they earn legally. Our government has been quite supportive of self employed people as they learn to save, invest and take care of themselves by using what is allowable. This does not mean employed persons don't do their best to achieve more financial independence but the rules are just different and they do benefit people in business. Many accountants who are used to working with nurses and physicians have good educational packets, expense tracking formats and tools to make the transition easier. Like all things new, you have to spend some time learning the rules and setting up your system but it is worth it in the end.
Of course, if you want to throw a party, there has to be lots to eat -- and there was! All of it was delicious!
Nurses love to get together and talk 'shop,' share their news, and compare notes on who is working where!
SNI's owner and CEO, Marty Minniti, was able to catch up with some nursing colleagues she hadn't seen in a while....
Our vendors had a chance to show their wares....(as in 'shop till you drop'!)
This very nice vendor had the yummy scented candles.....
....and of course, there just has to be make-up and potions......
...and jewelry! Looks like SNI people doing some serious shopping! ((left-right: Rosemary Keane, Marty Minniti, and Wanda Kartal)
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