Can you tell me the difference between SE status... sm

• This question is probably as old as the hills... - Confused
  • Yes, there is. SE the employer pays 1/2 of your SS tax. sm - MT is Me
    • Can you tell me the difference between SE status... sm - Tax Challenged

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I'm sure this has been asked a million times, but I am an IC and I am thinking of going to employee status to get benefits.  My husband will be self-employed in 2 weeks and we will have no insurance or anything.  I love the freedom of being an IC but need bennies.  We have no kids but probably will in a year or two.  Would like to know who has done the switch and if you regret it.

Thanks

An employer should constantly evaluate the employment status of its workers to ascertain if any of them should be reclassified from an independent contractor to an employee. Misclassifying a worker could end up being quite costly in terms of time, money, and resources. If an employer is forced to reclassify independent contractors as employees, the payment of back taxes, penalties, and interest could create major financial problems. Ultimately, the risks of incorrect classification are borne by the employer. 

These factors should be used as indicators to determine whether sufficient control exists for a worker to be classified as an employee. However, they should serve only as a guide. They are subjective in nature, and each factor may not be present in all situations. Moreover, the weight apportioned to each one is not always constant. No single factor can determine a worker's status; all must be used in conjunction with each other to assess whether sufficient control is present to establish an employee-employer relationship. They are as follows.

1. Instructions. If the person for whom the services are rendered has the right to instruct the worker how, when, and where to work, then the worker is ordinarily an employee. This control factor is present if the employer retains the right to require compliance with the instructions, irrespective of whether the employer actually exerts the right to control. The instructions can be either oral or in the form of manuals and/or written procedures that state the details and means in which the result is to be achieved. In contrast, an independent contractor is responsible only for the end result.

2. Training. An employer trains workers by requiring them to work with experienced employees, holding training meetings, corresponding with them, or any of several other methods. By training a worker, the employer explicitly or implicitly states that the services to be rendered must be performed in a particular manner. The employer demonstrates a right to control by teaching the worker to achieve the desired results in that manner. Independent contractors, however, use their own methods and means to obtain a result and do not receive training from an employer.

3. Integration. If a worker's services are integrated into the business operations, then the worker is generally subject to direction and control. When the success or continuation of a business depends to an appreciable degree on the performance of certain services by a worker, those services are assumed to be subject to a certain amount of control by the employer.

4. Services Rendered Personally. The requirement that services must be rendered personally by the worker indicates that the employer is interested in the methods used to accomplish the work as well as in the result. Generally, inability to delegate the services to another individual indicates that the employer controls the details and means by which a result is to be achieved.

5. Hiring, Supervising, and Paying Assistants. if the employer hires, supervises, and pays a worker's assistants, then the employer has control over those assistants and the worker should be considered an employee. However, if the worker hires, supervises, and pays his own assistants and provides the employer with materials and labor under a contract in which the worker is responsible only for the results, he is an independent contractor.

6. Continuing Relationship. Continuous interaction between the worker and employer indicates an employee relationship. Such a relationship may exist in which work is performed at frequently recurring, though irregular, intervals.

7. Set Hours of Work. Establishing certain hours in which a worker is to perform a job indicates an employer's control. The fact that an employer can dictate a worker's hours is indicative of an employee relationship.

8. Full Time Required. If a worker must devote full time to the employer's business, the employer has control over the amount of time the individual actually spends working and, by implication, restricts the worker from performing other gainful work. In contrast, independent contractors are free to work when and for whom they choose.

9. Doing Work on Employer's Premises. Workers required to perform their services on the employer's premises when the work could be performed elsewhere are under the employer's control, which is beyond that which would ordinarily be exerted over an independent contractor. The importance of this factor depends on the nature of the services involved and the extent to which an employer generally requires its employees to perform services on its premises. Control over the place of work is indicated when the employer compels the worker to travel a designated route, canvass a territory within a certain time, or work at a specific place.

10. Order or Sequence Set. If an employer has the right to indicate the order or sequence in which work is to be performed, then the worker is probably an employee, particularly if the same results can be achieved in a different order or sequence.

11. Oral or Written Reports. The requirement that a worker submit regular reports to the employer can indicate a degree of control. It means the worker must account for his actions on the job to the employer.

12. Payment by the Hour, Week, or Month. When a worker is paid by the hour, week, or month and such payment is guaranteed, whether or not certain results are achieved, the worker is generally an employee. In contrast, payments made by the job or on a straight commission basis generally indicate that the worker is an independent contractor.

13. Payment of Business and/or Traveling Expenses. The IRS is of the view that when an employer pays a worker's business or traveling expenses, the worker is ordinarily an employee. Conversely, a worker who is paid on a job basis and must pay all incidental expenses is generally an independent contractor. Another issue to consider when evaluating this factor is the agreement between the employer and worker as to how such expenses are to be paid.

14. Furnishing Tools and Materials. If the employer furnishes tools, materials, and other equipment for a job, this indicates that the worker is an employee. Independent contractors ordinarily furnish their own tools and materials. In determining what the classification should be, the value of the tools and materials supplied to the worker should be considered as well.

15. Significant Investment. A significant investment by a worker in the facilities used in performing services for another is a factor that often establishes an independent contractor relationship. Conversely, the lack of investment in facilities indicates a dependence on the employer for the facilities--which means an employee relationship exists. The rationale is that whoever provides the equipment necessary to perform the services controls the use of the equipment.

16. Realization of Profit or Loss. A worker who stands the risk of suffering a financial loss or realizing financial gain as a result of providing services to the employer is generally an independent contractor. In contrast, a worker who has no risk of financial loss is usually an employee.

17. Working For More Than One Firm. If a worker performs services for more than one unrelated person or firm at the same time, it generally indicates that the worker is an independent contractor.

18. Making Services Available to the Public. Workers who make their services available to the general public on a regular and consistent basis are usually independent contractors.

19. Right to Discharge. Employers generally possess the right to discharge only employees. The threat of dismissal demonstrates a degree of control over workers. In contrast, the IRS's viewpoint is that independent contractors cannot be fired unless they violate the terms of the contract for services rendered.

20. Right to Terminate. If the worker providing the services can terminate the relationship with the employer at any time without incurring liability, an employee relationship usually exists. Conversely, an independent contractor engaged to accomplish a task or provide a service may incur a legal liability if the relationship is unilaterally terminated before the results of the task are accomplished.

These 20 factors may not always be appropriate for determining a worker's employment status, especially in the case of a professional, such as a physician, lawyer, or dentist. Control may not be the dominant issue in determining a professional's employment status. Revenue Rulings 72-203 and 66-274 state that other factors should be considered when determining the employment status of a professional, taking into consideration the skill required for the task, the intent of the parties involved in the employment relationship, and the custom in the industry.

Have been an IC-MTSO for close to 20 years.  Deduct my office part of the house, phone, internet, cell phone, mileage for anything work related including banking, errands,  (of course  I pick up and deliver and that give me a $5,000 write off), medical insurance payments, retirement contributions,  supplies,  partial utilities.   Start out with 50 to 55K and pay my SS taxes on 12 to 15K.  To me it is well worth it.  I always over withheld from my husband pay check or just paid the small penalty at the end of the year but you can do quarterlies.   I went to a tax guy for one year saw how he did it and then just bought Turbo Tax and followed him.   Works well for me.   Sure his fee is deductible but you still gotta pay it.  I prepared so much for him that I felt I could just as easily plug those figures in as his "help" so that is what I do.  Any more questions, youcan e-mail me at pjsword @aol.com.

Patti

I have a question about independent contractor status. Have do you pay taxes? Can you deduct office supplies, electricity, etc? If anyone have information please let me know. Thank you.

I am currently an IC with a small service and would like to venture out on my own to make more money.  My service now takes 25% of my earnings each month and this seems a little high to me. 

What I would like to know is how should I determine a line rate with new docs? Or starting out on my own.  I have 3 years experience and have also worked in a hospital setting. Any feedback would be appreciated.

I have also found that a designated line for my C-phone to work the best.  Open up a checking account for your business and write all checks for your business expenses out of this account, i.e. phone, supplies, internet, etc.  Easier to keep track of this.  Deposit only into this account.   Keep track of mileage pertaining to your business, banking, supplies, meetings, etc.  Every mile helps.  If you are married have you husband up his witholdings to cover your taxes.  Easier that way.  If you were only PT at the national keep both for a while to keep you going as it is sometimes slow in the beginning.  Hopefully this one doctor will lead to more for you.  Good luck, write back with more questions.   I used to do contracts at first but found that if either one of us wanted to part ways, the contract did not help out that much.  If you do one,  I would basically just outline simply what each person would provide and state what was expected  regarding TAT, etc.  But it already sounds like you have that covered.    Good luck.

Patti

I would really urge you to look up IC status on the Internet -- the IRS has recently changed their stance and established behavioral control as one of their yardsticks for independent contractor status.  I can tell you this, their first rule has always been that there has to be a contract.  The advantage in your situation is that the onus is always on the employer--that is, if the IRS were to determine that you had been treated as an employee since November, the physician's office would be liable for back pay, back benefits, back paying overtime -- all of that.  And the IRS would most likely find against them because the IRS would much prefer collecting taxes from an employer than 1000s of ICs around the country.  You have all the leverage here, when you in a strategic position to make a stand, you should.

Why is this so hard for some places to understand?  I am an IC and have found very few places who understand this. 

1 - Yes, acute care needs a schedule which is understandable.  I agree to do X lines between X time and X time.  If I get those lines in early, I should not have to stay on unless I choose to work more.  A contractor that comes to your place of business or home to do a job who finishes early is not going to sit there until 4 even though the committed job is done at 3.

2 - If the work is not able to be done because it is not there, again, the contractor is not going to sit there and wait on you without charging a heftly hourly rate. 

Frankly, I feel an IC schedule is a guideline.  If the client needs a schedule, by all means, I try to stick to that as closely as possible, but it is the contactor's responsibility to budget their time.  I am soooo tired of interviewing with companies for an IC position and they freak out as soon as you say, "So, when I finish early..." 

If you want someone who will sit in front of that computer for 8 hours whether there is work or not, and remain there even after making their line committment you better pay their taxes and pay for any down time - that is called an employee people!

Sorry about the rant.  I am just frustrated. 

Yes, you are right. My experience has been the same, low pay, no flexibility and also no benefits.  Looked into an IC position. Told them of all my experience, 30+ years in acute care. She asked if I was a CMT and if I had done QA or editing. My reply was that I had not done a lot of editing or QA work as I liked transcribing more than editing and QA work. Also, the CMT is  pricey and often not an accurate judge of one's abilities.  Well, I guess they are looking for credentials instead of experience. Would you rather have 30+ years experience in acute care of just out of school with a CMT behind your name?  What gives?

Can anyone tell me what is the best place to look to find out info. regarding being an IC.  I don't necessarily mean equipment, etc., I'm more interested in the legalities regarding taxes, do I need a business license, etc.  Any info will be appreciated.  I tried archives but my question seems to be too broad -- maybe someone can help me narrow it down. 

TIA!!! 

I started working with another company as an independent contractor, but was told I had to work X number of hours and to chose those.  I chose and am required to comply with that schedule. 

Is this correct or is an independent contractor not required to follow a set schedule?

on the job board. It was an IC position but they want you to work specific hours...10am to 4pm or 12pm to 6 pm and rotate weekends.  I thought IC's didn't have to work set hours???

I've never worked as an IC and was considering it so please forgive me if this is a dumb question.