THE UPSIDE
There are numerous benefits to working as an independent contractor.
More freedom. This route provides more freedom and potentially
greater earnings to the dentist who is willing and able to invest
the effort. There is often an understanding that independent contractors are not exclusive to the practice, and therefore may
moonlight at other practices.
Possible tax savings. The independent contractor also may ultimately pay less in taxes. Although they do not have an employer
paying approximately half of their employment taxes, they can
deduct the expenses of doing business. More importantly, while
independent contractor dentists in Texas are required to pay
self-employment taxes (Social Security and Medicare) and federal income taxes, in addition to any other taxes under their chosen business entity, there are entity structuring options that can
significantly reduce their taxes. One potentially favorable business entity for independent contractor dentists is the
Professional Limited Liability Company (PLLC) that files taxes
as an S-corporation. Under the PLLC, the dentist is shielded
from certain liabilities (as opposed to being a sole proprietorship), and the dentist saves on taxes through the S-corp filing.
THE DOWNSIDE
The life of an independent contractor is not without its downsides,
however.
Less protection. Employee dentists have labor law protection
from exploitation and discrimination, and have the heft of the
Texas Workforce Commission on their side when it comes to
being timely paid. Independent contractors do not. As the name
suggests, their relationship with the practice
is governed primarily by state contract law.
This means that if the dentist is unpaid,
or has other grievances, the matter must be
settled in court. Independent contractors
also assume their own liabilities for
business operations and malpractice claims
against them.
selves of the tax benefits available to independent contractors.
Nevertheless, there are many practical and tax advantages to
being treated as an independent contractor.
By no means is there consensus on this subject, even among
respected industry professionals. Determining whether or not a
dentist can safely be classified as an independent contractor
requires a fact-intensive analysis, and every situation is unique.
Before accepting an arrangement as an independent contractor,
you should consult with your accountant and your attorney to
make sure that the relationship is structured in accordance with
the legal requirements and in a way that makes financial sense.
Joseph McGregor exclusively represents dentists. This laser focus on the industry has
enabled him to gain keen insights into a multitude of dental transitions, business models, and
scenarios.
Joseph’s legal education emphasized corporate
law, and his professional background is in larger
business transactions involving sophisticated
commercial acquisitions and real estate
arrangements. This training allows him to
appreciate the complexities in dental transactions at a level typically reserved for attorneys with exorbitant billing rates.
Depth of experience and service-orientation makes Joseph McGregor a frequent
source of help for both local dentists and many of the service professionals that
assist them. He is truly interested in seeking the best outcome for the dental
community in each transaction he touches.
Joseph McGregor handles most of McGregor’ ́