Locum physicians usually enjoy many benefits, such as the flexibility of choosing where and when to work, better pay, and more travel time. However, some locum physicians are paid as independent contractors, meaning they are in business themselves and are hired by health facilities that need their services. As such, they have to choose the right business structure. Unfortunately, choosing the proper business structure for locum tenens career is not a stroll through the park. It requires careful evaluation and a thorough understanding of the pros and cons of each business structure. This piece will explore various business structures available to locum physicians and help them make sound decisions that align with their personal and professional goals.
Choose a Vendor Management System
Choosing a vendor management system (VMS) is a strategic move for locum tenens physicians as it will help influence the business structure. Some companies help staffing locum tenens workers and connect them to relevant opportunities. They also help practitioners navigate the complexity of scheduling, billing, and compliance by setting up an automated system for these processes. Therefore, this will give locums more control over professional engagement since the system will allow them to focus more on patient care instead of administrative burdens.
Work as an Independent Contractor
Another business structure that locum physicians can use is to be independent contractors. That means they can choose their assignments, negotiate suitable terms, and set their schedule. Additionally, they can align their work to match their personal financial goals and, at the same time, tailor their choices to optimise tax advantages and liability protection. With this option, they will not only be working in their careers but also in a strategic business move. As a separate business, the professionals must have an Employer Identification Number (EIN), preferably open a separate bank account, and make quarterly estimated personal tax payments.
Register an S Corporation
Another business structure that locum physicians can choose is starting an S Corporation structure. The benefit of this structure is that it typically combines the benefits of limited liability with tax advantages. But that is not the only advantage. Physicians like this structure because income is passed through to them individually, so they can keep the income as low as possible to lower the overall taxes. However, this business structure limits the number and type of shareholders. Thus, physicians should look into this to ensure compliance with the regulations before registering their corporation.
Start a Limited Liability Corporation (LLC)
Locum physicians can also choose the LLC structure as this can help reduce business liability compared to other business structures. With this option, they can also shape a resilient and flexible business foundation. This business structure allows locums to mitigate personal liability risks, safeguarding their assets in case of legal issues. This framework enables physicians to optimise financial efficiency and operational autonomy, forging a reliable path in the dynamic landscape of temporary healthcare staffing. However, the IRS does not recognize LLCs, so physicians must choose other tax options like sole proprietorship, partnership, or corporation with this business structure. This allows the physicians to choose the tax system that best suits them.
All these business structures have their pro and cons. Therefore, locum physicians must do their due diligence and choose a system that best impacts their financial well-being and professional autonomy. They can do this by examining their needs and choosing a structure that sets the foundation for a successful and fulfilling locum tenens career.
