1099: 13 Easy Steps to Get Started
I transitioned from a W-2 job in 2023 to a full-time locum in 2024. Here is a checklist of what I did to prepare for working as an independent contractor. These notes are in chronological order, and some were handled concurrently.
I’ll keep each point short because each deserves their own blog entry with the number of notes I have in front of me. If you have things to add, please comment to help the community.
Don’t get analysis paralysis. I felt this coming on a couple times throughout the transition. As per usual, select an option that will likely suffice and commit to it.
TL;DR
1099 options are more common than ever.
Starting a business is optional.
Benefits are expensive.
Don’t worry. More detailed blog posts will follow.
Deciding 1099 is the way to go
This was easy for me. Almost all locum jobs are 1099. That’s the lens I’m writing though.
Increasingly full-time jobs have a W-2 and 1099 option. There are pros and cons to both. The pros are more substantial when travel is involved. Regardless, the following steps are only necessary if you anticipate part time, full time, or locum work as an independent contractor.
Do your homework
Oh no, not work outside of work… Really though, brush up on the basics. Prepare to vet the team necessary to successfully manage the 1099 life. Vet this list. Vet every aspect of the list. There are significant resources accessible with just an internet search.
There are CRNA locum and 1099 pages out there explaining the basics. Sit down for a few hours and take notes. That will significantly decrease mistakes saving time, money, and frustration.
Each state has different rules and regulations. Uncertainty cost me a couple bucks due to a last-minute change. Oh well, it’s only money. You don’t need to know enough to replace your CPA and attorney but know enough to be dangerous.
Start any licensure applications now. RN, CRNA, and DEA applications take time. Don’t let them be the hold up! Compact states for RN licensure make things easy. CRNA compact underway! DEA transfers are quick.
Sole proprietorship versus LLC
Sole proprietorship is an unincorporated business. It’s the default status if you do work and are paid as a contractor. Really minimal paperwork is required. You, as the individual, operate this unofficial anesthesia business. You are responsible for all business income, expenses, and debt. There is no separation between assets and liabilities held personally or with the sole proprietorship (your anesthesia work).
My original plan was to locum during my 13 callback weeks. I would have opted for the simple route to function as a sole proprietor.
The situation changed and I set my sights on full-time locum work. Due to the increased income and liability, I opted for an LLC (Limited Liability Company). An LLC allows for a separation of personal and business endeavors. If a lawsuit were to occur, only assets held by the LLC are at risk, not my personal residence.
Some states allow CRNAs to use an LLC while others require a PLLC (Professional Limited Liability Company). They function similarly. I did some online research and contacted a few CRNAs in the area to see what they used -- LLC for me.
No need to waste a lot of time for no reason. Spend your time researching and speaking with savants.
I started by visiting the Secretary of State website to perform a search for available LLC names. Originally, I planned on opening the LLC in Arizona, but the job change led me back to the Midwest. This meant I was knowledgeable enough to open an LLC in Arizona, but not so much in other states. Due to the short timeline, I hired a law firm to do it on my behalf.
The attorney asked about structure. Single entity. I am the sole owner which limits liability for Mrs. TFC. The company has two employees, Mrs. TFC and me. She is a treasurer and manager. This allows her ample access to manage payroll and help with scheduling.
Let’s be real, she does ALL of my scheduling – personal and professional. And she does payroll. And she enters business expenses to our online platform. When the IRS asks about all of the coffee as a business expense, it’s legit.
We approach contractor work as a team game. She just tells me when and where.
The paperwork to establish an LLC isn’t bad. I’ll be filing future LLCs on my own. Each state has unique requirements, but there is typically a form submitted to the state with a filing fee. Online and paper options available. Standard and expedited options available. There is a small annual fee. Both vary by state and range from free to $300. There are a few outliers.
My timeline was short because I needed the LLC to set up many of the following. Discovered this as I looked into the following points. I wanted the LLC that brough home the bacon to be bulletproof, so I wasn’t opposed to professional help.
$600 covered two consultations and all of the LLC paperwork including the articles of organization. You will need the articles of organization many times in the future so keep it close.
The process was actually pretty quick, so I had time to spare.
S Corp
Not the time to talk about S Corps (or C Corps) in detail, but I will be filing my LLC as an S Corporation. “S” is the subchapter. For clarification, LLC is the company; S Corporation is the tax status. I created an LLC and filed as an S Corp.
S corps and LLCs are both types of pass-through entities. It’s essentially how the income flows from payment for contracted work to the shareholders (aka you as the owner).
I’m not an attorney and don’t know the precedent of protection when it comes to sole proprietorship versus an LLC. I like the concept of protecting personal assets in case of litigation. The business expenses are similar in both setups.
Taxes with the LLC route are a bit more complicated and warrant professional help. I’m done doing my taxes anyway, so the cost savings aspect of sole proprietorship doesn’t apply to me.
Employer Identification Number (EIN)
Big scam area here. Businesses need an EIN. They are free from the government, but so many companies will happily provide the service for $200.
Just apply through the IRS website DURING BUSINESS HOURS ON A WEEKDAY. It took me 5 minutes to fill out the form and received an EIN minutes later. EZ PZ.
Certified Public Accountant
There was an emergency room physician that hooked me up with a good CPA when I was looking at moonlighting in AZ. Well, I ended up working massive overtime at my full-time job and never had the need to leave for locum work.
When I asked the CPA about his tax knowledge regarding the Midwest, he appreciated the offer to stay on as council, but said local help would serve me better. So I began reaching out in the Midwest. I started 0 for 2. Neither firm understood what I was looking for.
I don’t think they were familiar with medical professionals. Their knowledge of salary and distributions did not match my research. Their knowledge of business and travel expenses was minimal at best. All in all, short lived relationships.
A local CRNA set me up with his CPA who is close to retirement, but still runs the firm. He is great. He knows CRNAs and the anesthesia world. He understands the tax code including the gray areas.
He doesn’t encourage coloring outside the lines, but he at least knows where the lines reside.
Mrs. TFC met with his firm, and they helped us set up the payroll. I was going to have payroll as a separate item, but that’s about it. Hire it done or buy a program like QuickBooks or Peachtree.
I fully expect the accounting bill to be a few thousand dollars and it will be worth every penny. Also, a business expense.
Business bank account
Our personal bank offers business accounts. We opened a business checking account to segregate business and personal dollars. Big NO-NO to mix the two.
The bank required proof of the business such as articles of organization and the EIN. Pretty easy. Mrs. TFC wanted a debit card from them. And we ordered a book of checks.
I injected the business with $10,000 to get everything running and pulled it as soon as funds started rolling in.
Business credit card
Again, good way to segregate expenses. Just like the bank account, I submitted the articles of organization and the EIN. I also submitted my personal information and went through a credit check.
We ended up with the Chase Ink card. $5,000 monthly limit. 1.5% cash back. Travel cards carry a better rewards program, but 1.5% cash back is better than nothing. As we go, we can always look for a different card.
I have been considering some of the paid cards, which have great rewards. Life is a bit unpredictable now and I’m a bit cheap to spend $400 annually on a maybe.
Health insurance
This is expensive. Like, really expensive. Our coverage was ending at the end of 2023, so we needed coverage starting January of 2024.
COBRA (Consolidated Omnibus Budget Reconciliation Act) is an option for continued employer sponsored health coverage. This simply allows prolonged health insurance coverage up to 18-36 months for those leaving employment. Not a great long-term option.
The Marketplace is an option. There are 3 major healthcare organizations in the Midwest. Each Marketplace plan allowed for 1 of the 3 to be in-network. This would be fine for those staying in a small area. Doable, but not great if we decide to locum away from home.
We settled on Blue Cross coverage. Mad expensive. Primary prevention is lacking, but great coverage with a nationwide in-network network. It will run our family of 3 about $18,000 annually.
Good news, the LLC pays the premiums. And our plan has a deductible greater than $1,600 per month allowing access to a health savings account (HSA). If a spouse has access to health insurance through a different employer, premiums may not be deductible.
Other benefits
W-2 jobs come with benefits. Contractor work does not. If you want short term disability, long term disability, life insurance, or any other benefits, it is on you.
We recently picked up some hearty term life insurance.
Malpractice
Each facility has their own requirements but $1M/$3M is common for CRNAs. Many companies offer malpractice coverage. The AANA partners with an outside company for coverage. That’s who I went through.
I simply selected which states I was planning on working and they provided a premium. My premium is about $1,750. Higher for some states, lower for others.
I have heard different philosophies about malpractice and when to carry your own. I’m working with a recruiter who offers coverage, but I wanted my own so I can seamlessly work elsewhere. I also refused coverage through the recruiter to only have 1 policy.
Credentialling paperwork
I made a folder with all of this stuff. Each facility is going to ask for this. Same mothership -- doesn’t matter. No one seems to communicate these days.
CV
Diploma
NBCRNA Certificate
Case Logs for past 12 months
Malpractice insurance certificates
Additional Certifications (ACLS, BLS, PALS…)
References
Driver’s License
Photo
They will likely send a form for you to request privileges. As a full scope of practice CRNA, I request pretty much everything except fluro guided injections. This has been extremely frustrating because some admin person tells me what I can and can’t do.
Really though…I practice at independent/solo sites and take solo call. Give me permission to do my job. Don’t restrict nerve blocks, arterial access, or central venous access. It’s a miracle I don’t need to be proctored on 10 intubations with each blade at each facility. Apologies for the rant. 😊
Sign Contracts
After agreeing on terms, sign the contract. Many locum contracts are protected within 30 days meaning I will be paid for any work cancelled within that time frame. Anything farther out than that, either party can terminate the contract with minimal consequences.
Prepare for the upcoming dates, but don’t get carried away booking too many amenities.
Book housing
This applies as a locum, not a 1099 position in your hometown. Don’t book dates too far in advance. And note how this comes after signing a contract. Don’t fall victim to moving to a location only to have the job fall through.
Many contracts include housing, aka hotels or on-site housing, if needed.
Have your protections in writing. Book far enough out to secure housing, but don’t get carried away.
Other Notes:
I haven’t had any trouble with hospitals or recruiters in my short time as a locum, but there is always a chance.
For as much as we say healthcare is about patients, it’s a business. You are part of a much bigger picture. A sliver. A morsel. A crumb. A very important sliver/morsel/crumb, but small fries, nevertheless. Protect yourself.
I have had a great experience all around. I enjoy the locum work. I’m meeting all sorts of new people. I’m practicing differently in each place – mostly due to a partial array of anesthesia equipment. Don’t be that locum who rocks the boat too much.
It’s my objective to provide great anesthesia while relieving staffing strain. This is why I also offer call – nights and weekends. Desirable places don’t call for locums, so set expectations accordingly. More on my locum experiences in the future.
Thanks for reading! I hope you found this brief rundown of 1099 preparation helpful.
