What Kind of Business Are You Running?

A plain-language primer on W-2 employment, 1099 contracting, and sole proprietorship for clinicians.

RIACT  |  BUSINESS OF PRACTICE

One of the most consequential decisions a clinician makes when leaving an agency or group practice is about business structure, and it is often made with almost no information. The three most common arrangements for clinical practice each have meaningfully different implications for income, taxes, legal exposure, and flexibility. Understanding the difference between them is not just an administrative matter. It shapes how sustainable and workable your practice is over time.

This article is not legal or tax advice. It is a plain-language orientation to three structures so that you can ask better questions of the accountant or attorney whose guidance you should seek before making formal decisions.

W-2 Employment

When you are a W-2 employee, you are on someone else's payroll. The employer withholds income taxes, Social Security, and Medicare from each paycheck before you receive it. In many arrangements, the employer also contributes to your Social Security and Medicare taxes and may offer benefits such as health insurance, paid time off, and retirement matching.