I am considering a job where the employer typically has paid the associate as an IC but he would consider an employee situation. At this point I think being an employee would be better for me for the obvious reasons, but I’ve got to think if the increase in % of my payment is high enough it can actually be better financially to be an IC.
If I get paid as an employee it will be at x% of collections, whereas if I’m an IC it will be at x% production. There has got to be a break even point where if my % is high enough as an IC it would be better financially. So I’m trying to figure out where those %s need to be for me to even consider being an IC.
Can someone detail to me the expenses that I would incur as an independent contractor besides the extra ~7.6% in taxes for social security and medicare?? I figured I will need to spend more on a CPA to figure my quarterly numbers. I need health insurance so as an IC I guess I’m on the hook for that on my own. I’m assuming I would need my own malpractice insurance. Any other expenses I need to take into account? Does anyone know the % increase that would be required to make being an IC worthwhile? I’m just thinking that 45% of production as an IC may be better than 35% of collections in an office with a 95% collection rate as an employee. Those are ficitious numbers btw.
Sorry if that was vague, thanks in advance for any help-
I’m confused as to why there’s a difference between the basis of your revenue (prod or collections) based upon whether or not you’re an IC or an EE, is that what the employer is offering? Ask them why.
It seems to me you want to resolve whether you get paid on prod or collection, THEN discuss the % you will get paid based upon an IC or EE.
Generally speaking, just about any expense you’ll “need” as an IC, you’ll need as an employee, the only real difference is how they’re treated income taxwise IF YOU have to pay them from your pocket and if the “employer” can pay them – depending on how they treat you. Just be aware that almost any expense an IC pays & can deduct, an employer can pay on your behalf and get the same deduction AND you can keep both parties in the same, if not BETTER cash position.
Bottom line is you need to discuss your specific issues with a CPA to assist you in making the right choice for you.