I have been working as an independent contractor SLP for 20 years. I started out doing contract work one summer when I was on summer break from my school based position. One of my friends was working as an independent contractor SLP as a subcontractor providing speech-language therapy services in skilled nursing facilities. I worked a couple of days a week as a way to make side money. After having children, I wanted a more flexible schedule and decided to pursue being an independent contractor SLP in the school setting. Here I am 20 years later, and I am still working my dream job. For me, it has been a perfect fit. Over the years, I have been asked: “how did I become an independent contractor.” There are some essential things you need to know before deciding to be an independent contractor SLP.
Definition: Contractor, Subcontractor
First things first, let’s define some key terms. What is an independent contractor? An independent contractor is a person contracted to perform work as a nonemployee. A person is an independent contractor if the payer has the right to direct only the result of the work and not what will be done and how it will be done. A subcontractor is one who takes a portion of a contract from the primary contractor. The critical point about subcontractors is that they form agreements with the contractor, not with the customer. If you work for a contract agency you may be working as an employee or a subcontractor.
Formation of Your Business
Both independent contractors and subcontractors are considered self- employed and are subject to self-employment tax. Self-employed individuals pay self-employment tax (SE tax) as well as income tax. SE tax is a Social Security and Medicare tax for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. As an independent contractor SLP, you can operate as a sole proprietorship, LLC, or incorporation. A sole proprietorship exists when one person is in business for him or herself. If you are working for just yourself, you can easily operate as a sole proprietor, but if you are thinking of hiring others or subcontracting, you may consider forming an LLC or incorporating. In any case, it is always best practice to get the advice of an attorney and accountant. I work as a sole proprietor and have also hired subcontractors.
Taxes and Deductions
As an independent contractor, it is wise to hire an accountant to offer advice and help prepare your taxes. The cost involved is not that much more than if you were to hire an accountant to do your individual taxes. Over the years, I have paid $200-$300 to prepare my husbands and my taxes. It is wise to meet with an accountant before beginning work as an independent contractor SLP to find out what documents you need for preparing taxes. The tax laws have changed over the years, and you may take the standard deduction or itemize. An accountant will tell you what is best for your business. Typical deductions include treatment material, office supplies, automobile expenses, licensing, and home office expense. Click here to download my list of expenses typical for independent contractor SLP. There is software available to keep track of your business expenses such as Quicken.
Pros and Cons
There are pros and cons to being an independent contractor SLP. As an independent contractor SLP, you have the freedom to determine when and what days you work, how many hours and what type of work you do. Generally, you will get paid a higher rate than you would if you were an employee. There is a great deal of flexibility being an independent contractor SLP. You will have to consider the cost involved to perform your job, including assessments and materials. You will need to consider the cost of health care and a retirement program. As an independent contractor SLP, you will not receive vacation or paid holidays.
In the upcoming blogs, I hope to provide you with the knowledge and tools to determine if being an independent contractor SLP is right for you. I will include information on marketing, negotiating contracts, witting contracts, invoices, setting up your business (sole proprietor, LLC, incorporation), taxes, deductions, expenses, retirement plans, insurance, rates, and necessary materials. To get updates on upcoming blogs, please sign up here and don’t forget to download a list of expenses that are tax deductions.
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