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What does a successful independent contractor look like?
Just as there are many pictures of successful chiropractic practice, there are many possibilities for successful independent contracting. Every situation is different, depending on the personal preferences of the two doctors involved. Here are some of the most common types of independent contractor situations:
• IC Situation 1: Dr. Jenny has a very busy office and she is constantly turning away prospective patients. She also has some room in her office for another doctor. She contracts with Dr. Sara to come in several days a week to see the new patients. Dr. Sara uses Dr. Jenny’s office staff to schedule her patients, the equipment in the office, and she doesn’t advertise as a separate entity (even though she has her own sole proprietorship). Sara is paid a percentage of the collections for the patients she treats. Sara provides care for patients using her own techniques, which are similar to those of Dr. Jenny; Sara does not get trained by Dr. Jenny. She comes in when she has patients scheduled, and she can work in other chiropractic offices if she chooses. Since Sara is seeing Jenny’s patients, she could not take them if she left, but she could take any patients she brought into the practice.
• IC Situation 2: Dr. Joe got himself into an office that is too big. To help with the rent, he decides to sub-lease part of his office to Dr. Corey. Dr. Corey pays a monthly amount to Dr. Joe, depending on the number of patients he sees; this arrangement might be called a “stepped sub-lease,” since the amount is in stepped increments. Dr. Corey uses the services of the front office staff and the rehabilitation assistant. They file insurance for him and collect payment, but they keep his records separate. Dr. Corey has a different business name, a sign and business cards; he even bought a separate phone line which the staff answers with his business name. Corey could leave at any time and take his patients with him.
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• IC Situation 3: Dr. Lisa and Dr. Sam want to work together in an office, but they don’t want to be partners. They formed a corporation to buy a building, and each one has set up a chiropractic practice within that building, with the practices renting space from the corporation. Lisa and Sam share a front desk person and insurance person, but the patients records are kept separate, and separate books are kept. They both pay the corporation half the rent each month, and Lisa reimburses Sam for half of the office overhead costs (including the staff salaries). They take turns being “on call” and they both see patients of the other doctor. Either one could leave at any time and take his/her patients; the corporation would continue to own the building. Both Lisa and Sam are independent contractors, each with a separate practice identity.
An important note about independent contractor situations: The IRS frowns on hiring employees and calling them “independent contractors.” It’s not easy to tell, and the IRS assumes that the worker is an employee unless it can be proved otherwise. Read IRS Tax Topic 762 for more information. If you receive a contract that calls you an “independent contractor,” read it carefully and take it to an attorney before you sign. Remember, if you have to ask, you’re probably an employee.
Related articles from Chiropractic Economics:
Ask the Attorney: Employee or Contractor?
Independent Contractor: An Option for a New Practitioner
