Private Practitioner's Corner: When Hiring, Should You Pay Staff as Employees or Contractors?
[Source: The ASHA Leader]
by Janet M. Krebs, MS CCC-SLP
One of the questions posed most frequently by private practitioners is, “When I hire others to work for me, can I pay them as contractors?” The correct answer is, “It all depends on the role they will have in your business.” That answer may sound evasive, but the determination is not simple and all the requirements need to be considered.
As an employer, it always appears to be simpler to just hire someone as an independent contractor who would be responsible for his or her own taxes and Social Security deductions—and all you have to do is cut a check for hours worked and issue a 1099 form at the end of the year. That’s what I did when I first had speech-language pathologists working for me. Everything went along smoothly until my state Department of Labor decided to audit my business. After lots of anguish and preparation, it turned out that I owed the state six years of back taxes and penalties for all my employees.
The decision brought me to my knees. The only silver lining was the state’s willingness to waive the penalties—leaving me responsible for paying only the back taxes—if I immediately changed the status of all my “contractors” to “employee.” The state is motivated to weed out independent contractors because employees yield more revenue—that is, an employer pays a larger percentage of the employee’s income in taxes than does an independent contractor.
Read the Rest of this Article in the ASHA Leader (You will have to scroll down – as it is a sidebar article)
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