Our firm was founded on the principle of “Better service through specialized knowledge.” We believe that becoming experts in the fields of dentistry and medicine is far better than having limited knowledge in a vast number of fields.
Independent Contractor, Salaried Employee or Incorporated?
The economic ramifications of being an associate can be very rewarding if the proper legal relationship is negotiated. Here are some worksheets that allow you to see how each of the three relationships affect your compensation and tax liability.
The Independent Contractor:
The independent contractor is able to deduct business costs and expenses. The disadvantage is the independent contractor’s net profit is subject to self-employment tax. The tax is approximately 15% of the first $100,000 in net earnings and 3% of any excess over $100,000. As an employee, your employer pays one-half of these taxes. You can have retirement plans with maximum benefits. In addition, cafeteria plans for other tax deductible benefits are available. The independent contractor has a high IRS audit potential.
Salaried Employee:
The major disadvantage to being a salaried employee is that some or all of your business costs and expenses may not be deductible. The advantage is that your employer pays one-half of the social security tax. Your retirement plans are limited to an IRA ($4,000 to $5,000 maximum).
Incorporation:
The major advantages to incorporating your practice are that you can deduct your business costs and expenses. Your social security taxes can be limited. You may have a retirement plan that allows you to have maximum limits. In addition, cafeteria plans are available for other tax deductible benefits. Corporations have significantly less IRS scrutiny when compared to the independent contractor.
