As independent contractors, locum tenens providers have a number of options with tax and practice implications. Many increasingly look to the benefits of LLcs for locum tenens providers.Recently, CPA and Barton Associates tax guide author Andrew D. Schwartz hosted our locum tenens tax webinar to answer your burning tax questions.
Throughout the webinar, Schwartz discussed the basics of doing your taxes as an independent contractor, common deductions, retirement accounts, health savings accounts, estimated quarterly taxes, planning tips, and considerations.
Have you thought about other ways in which this knowledge might further your career? Let’s delve into the numerous potential benefits of LLCs for locum tenens providers:
1. Protect Yourself From (Most) Legal Issues
As its name suggests, a limited liability company (LLC) can shield you from holding personal liability if the the company is sued or develops debt. However, limited liability isn’t to be confused with complete legal immunity, as it doesn’t apply to medical malpractice and other wrongful acts.
It’s worth noting that Barton Associates’ comprehensive medical malpractice insurance coverage makes for a worry-free locum tenens experience, guiding and supporting you through covered claims that might occur while you’re working as a locum with us.
For extra protection, starting an LLC for locum tenens providers can potentially be an important step toward protecting yourself, your employees, and your assets.
2. Experience the Tax Benefits of an LLC
Locum tenens providers experience the freedom to deduct more business expenses than traditional employees. Professional expenses commonly incurred by locums include health insurance, travel, lodging, meals, automobile expenses, education, licenses, and examinations. (To clarify, travel, lodging, meals, and car expenses are often reimbursed and therefore not eligible as tax write-offs.)
When you start an LLC as a locum tenens provider, you could experience even greater tax-related benefits. By definition (in most cases), one of the benefits of an LLC is that it allows for pass-through taxes. This means you’ll avoid filing a corporate tax return and bypass double taxation.
3. Avoid Tedious Paperwork and High Startup Costs
You handle enough paperwork as a medical professional. In your high-stress career, any opportunity to lighten the load must be taken seriously. One of the great benefits of an LLC is that locum tenens providers are freed from the burdens of excessive registration paperwork and high startup costs. With the weight of these tedious details mostly lifted from your shoulders, you’re liberated to get back to what matters most: great patient care!
4. Build Your Reputation
In healthcare, you know the importance of building patient trust, establishing a good reputation, and developing a unique personal brand. While experiencing the benefits of an LLC, you can boost your credibility as a business, framing yourself in a more prestigious light to other companies (such as lenders, partners, and suppliers) with whom you might want or need to work in the future.
5. Take Advantage of New Tax Reform
In your career, it’s crucial to be aware of how new and impending laws, rules, and regulations affect your practice. Under the new Tax Cuts and Jobs Act of 2017, pass-through entities such as LLCs aren’t granted a specific tax rate or cap. However, there’s good news! Locum tenens providers who choose to set up an LLC (or another pass-through entity) can deduct 20 percent of their income in addition to their health insurance premiums.
How else might you experience the benefits of an LLC in your locum tenens career? What else do you need to know before getting started?
Learn more about doing your taxes as a locum tenens provider with our newly updated tax guide!
Note: This blog was originally written in 2018 by Claire Cavanaugh, and has since been updated by the Barton team with relevant information.
Neither Barton Associates, Inc., nor any of its affiliates or employees provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended as tax, legal, or accounting advice. Consult your own tax, legal, and accounting advisers before undertaking any particular action.
