1. A Day In The Life - 1099 Employee vs. W-2 Employee

Psychology House uses a common business model within the private practice community, which is to employ our clinicians as 1099 employees (or independent contractors) instead ofW-2 employees. In doing so, it simplifies administrative work for us while providing a lot more freedom and flexibility for our clinicians. In fact, hiring our team members as contractors is one of the methods we use to drive towards our goal of creating the perfect place to work. One where our clinicians never want to leave. But, if you’re new to the world of being a 1099 employee versus a W-2 employee, you may be wondering what the difference is? And what are the pros and cons to each? And that, is why we wrote this guide.

W-2 Employee

In general, regardless of the industry, when a company hires a new team member, they are typically a W-2 employee. This is because, as an employee, your employer can dictate things like when your workday begins and ends, how and where your work is done, and other common terms of employment, like an allotted number of vacation and sick days. In exchange, you are given an agreed upon yearly salary. Many W-2 jobs also come with benefits like PTO, health insurance, and a 401K. As a W-2 employee, your taxes are automatically withheld by your employer and at the end of the year, you will receive a W-2 form showing what you were paid and what taxes were withheld.

In the world of Psychology, a W-2 employer would be able to determine when your work day begins and ends, the number of clients you see per day, the type of clients you see, whether you are providing on-site or virtual therapy, and the methods by which your clients are diagnosed and treated.

1099 Employee (Independent Contractor)

As a 1099 employee, you are not viewed by the state as an employee. Instead, you are seen as a business providing a service to another business. You are, in other words, self-employed. And with that comes the flexibility of self-employment. You determine how, where, and when your work is done. You determine how many vacation days and sick days you get. You even determine your rates. Instead of your employer withholding your taxes each paycheck, you are responsible for setting that money aside yourself (we show you how to do that in article #5). You also have access to additional tax write-offs and tax strategies should you choose to use them (an accountant can layout what’s best for you). 1099 employees tend to earn a higher income than W-2 employees as well. This is because W-2 salaries tend to be a little lower in exchange for benefits like PTO, health insurance, or a 401K. As a 1099 employee, an employer can’t legally offer you those benefits. Instead, the contractor charges a higher rate to make up the difference. Resulting in higher yearly earnings.

In the world of psychology, a 1099 employee would be able to determine when their day begins and ends, the number of clients they see per day, the types of clients they see, whether they see clients on-site, virtually, or both, and the treatment approaches they choose for each client.

Pros & Cons of 1099

Pros:

• Make your own schedule

• Determine how many clients you want to see in a day

• See the populations of your choosing

• Focus on your preferred areas of specialty

• High earning potential

• Autonomy

• Work/life balance

• Take as many vacation or sick days as you choose

Cons:

• No benefits like paid time off or health insurance (See health insurance options in article #7)

• No fixed yearly salary

• Responsible for finding your own CE credits

• Setting aside your own taxes