Independent Contractors and Your Optometry Practice
These days, there is no shortage of staffing issues across the United States. This is why many optometry practices are turning towards independent contractors to fill staffing voids or complete specific projects.
Independent contractors can make your life much easier by ensuring you're adequately staffed. They get to maintain flexibility and the chance to work at other locations, while you get the benefit of having staff to take care of your needs.
However, from an HR perspective, independent contractors come with real challenges. We've created this guide to help you sort through these challenges and ensure you're effectively managing any independent contractors in your optometry practice.
Understand the Difference Between Employees & Independent Contractors
First and foremost, let's take a look at the difference between an independent contractor and an employee. According to IRS guidelines, an independent contractor is someone who controls the result of the work they do, but not what work they do or how it is done. If either of the "what work" or "how" is controlled by you, they likely must be classified as an employee in your optometry practice, not a contractor.
Realistically, what does this mean? First, it limits the people who can actually be independent contractors. Someone who does marketing or accounting could certainly be an independent contractor, but someone who is an optometrist, associate, or lab technician almost certainly cannot be. This means you will have to hire these individuals as employees.
If you decide you'd rather hire a full-time or part-time employee , make sure to check out our HR 101 Hiring Toolkit.
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Paperwork & Payment
There are big differences in the two P’s: Paperwork and Payment.
In terms of paperwork, there is still some documentation that you need to gather when hiring an independent contractor. Most important is a W-9. The IRS requires a W-9 form for any new employee upon hire. This document records vital personal information, a social security number, and a tax ID number. You will need to keep this form on file. Many documents must be retained for three years, although this is not the case for all forms, as retention periods can vary, so be sure to stay on top of the requirements for your state.
It is also incumbent upon you to ensure that your independent contractor meets any state licensing requirements. For example, if you are hiring an associate optometrist to cover shifts or supplement your existing practice, you must ensure their medical paperwork is up to date and that all appropriate certifications are on file. It doesn't matter if they are on your payroll or hired as an independent contractor.
Since there are so many state-specific requirements, it may be difficult to track what is happening in your state. HR for Health has state-specific new hire checklists. When you hire an independent contractor, we can help ensure that they get the right forms with our software. Depending on their role, some optometrists - like associates - may have to present their certification and have that stored. Our software makes this easy with our certification tracker.
Paying an independent contractor is much easier than paying an employee member of your team. This simplicity comes from the difference in withholding. You and the contractor will come to an agreement on how much they will be paid, and on what basis they will be paid: hourly, per-patient, etc. You write the check to the contractor... and that's it. There's no need for you to withhold pay for social security, unemployment, or anything else. That burden falls on the contractor.
Tracking the paperwork, performance, and compensation of an independent contractor in your optometry practice can be a challenge. Click here if you are interested in seeing how our software, in combination with our payroll service, can help to minimize those challenges. By hiring HR for Health, you are allowing us to help you manage your practice, giving you the time you need to concentrate on optometry.
Taxes & Contracts
As noted above, you do not have to withhold any money from independent contractors for tax purposes. However, you still have to report your independent contractor expenses to the IRS. This is done via the completion of form 1099-NEC. Furthermore, you are required to present that information to your independent contractor. This must be completed no later than January 31.
Different states and local governments have different regulations regarding state taxes. You should consult with a Certified Public Accountant (CPA) to ensure you're complying with all state requirements.
Finally, you will want to ensure that you create a clear and concise contract with your independent contractor. Every contact is different, and you will want to consult an attorney about the specifics of this contract. However, some items will likely stay the same, regardless of the nature of the job. Every contract should contain:
• Clear guidelines about the work being completed.
• Specifics on reporting.
• How disputes about the quality of work will be handled.
• Payment, including specific amounts and when they will be due.
How HR for Health Can Help
At HR for Health, we're here to help. We have experts that can help you understand the process to hire an independent contractor, improve your independent contractor onboarding process, and ensure your HR needs are being met. Click here to schedule a demo and learn more about how we can help your business grow.