Whether you have just obtained your medical license or wish to change your practice of twenty-five years, there are various factors you should consider before joining a practice. The first question is whether you will be employed or will be a principal in the firm.
If you are to be employed you must decide whether you will be an employee or an independent contractor. That determination is frequently negotiated because it will have far reaching consequences for both parties.
An independent contractor is responsible for paying his or her own taxes on the income earned, paying workers’ compensation premiums and perhaps solely responsible for his or her own professional liability. These additional responsibilities may affect the compensation paid for services rendered. There are factors which are used to determine which category you should be in principally revolving around whether you exercise control over your actions. They include whether you control your own hours and place of work, whether you may hire a substitute or additional service providers to perform your work, whether you control the methods and procedures of your work and whether you provide the tools and facilities to provide your services. This list is not inclusive. If the Internal Revenue determines that you have categorized your position incorrectly, the employer may suffer somewhat drastic consequences including punishment for the failure to withhold and pay taxes on the employee’s behalf especially if the employee has failed to pay taxes. The employment contract should be specific in addressing these and other issues in order to minimize risks to both parties. Next up: What else should you include in your contract?