The RDtoCEO Podcast
Dive into The RDtoCEO Podcast, hosted by Registered Dietitian and CEO, Eva Haldis, where she shares her journey in entrepreneurship, with discussions on the basics on building a private practice and becoming a confident CEO. The RDtoCEO Podcast is your go-to resource for mastering the art of transitioning from a dietitian to a successful CEO.
The RDtoCEO Podcast
W-2 vs 1099: Navigating Employee Classification for Your Private Practice
Are you ready to make the right hiring decisions for your practice? Join me on this episode of the RD to CEO podcast as we break down the complexities of choosing between 1099 independent contractors and W-2 employees. With insights from the IRS, Julie Harris's book "Profit First for Therapists," and my own research, we'll arm you with the knowledge to navigate this big decision!
We'll explore the differences, pros and cons of each, and I'll share my analogy/real-world example of how I've chosen to structure employment with my practice! Don't miss out on the important links below to help you with some more information!
Links & Resources Mentioned
https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
https://www.adp.com/spark/articles/2021/05/1099-vs-w2-what-you-dont-know-could-cost-you.aspx
https://www.profitfirstfortherapists.com/
https://gusto.com/h/eva6486 - *affiliate link*
Want a question answered on the podcast? Send me a message, or a text message, and maybe it'll be featured in an episode!
You can send me a message on IG -
https://www.instagram.com/evahaldis_rd or https://www.instagram.com/rdtoceo
Find more about RDtoCEO at https://www.rdtoceo.com
For episode updates and coaching packages, check out our website - www.rdtoceo.com
Affiliate Links Often Mentioned:
Gusto for Payroll - https://gusto.com/h/eva6486
Practice Better- https://practicebetter.partnerlinks.io/evahaldis9298
*Please note that while we strive to provide valuable insights, our podcast is not a replacement for personalized legal or financial counsel. We strongly advise consulting with qualified professionals for specific advice tailored to your individual circumstances.*
Welcome to the RD to CEO podcast. I'm your host, eva Haldis, registered dietitian, who one day found herself a whole CEO of a business. Join me as we navigate the world of entrepreneurship so you can go from being an RD who sees clients in private practice to a confident CEO growing the practice of your dreams. Hi everyone, Welcome back to another episode of the RD to CEO podcast. I've teased this topic a few times so far in the episodes that I've already posted, and it was one that definitely comes up a lot online. There is a lot of different discourse out there on hiring and making the decision to hire somebody as a 1099 independent contractor versus a W-2 employee, and it can get very confusing, and I think as dietitians we are so perfectionist and type A at times sometimes all the times but often and we have this big fear that we are going to do something wrong or get in trouble, and I think this really shies people away from the hiring process altogether. Or sometimes people take one route over the other because they feel like it's easier to start and then figuring it out as they go, but it's actually not as complicated as I think people want to think it is, or that it seems, and so I'm hoping after today's episode you feel a little clearer on the difference. Of course, that's a disclaimer. I am not a attorney, by no means I'm an employment lawyer or an accountant, so this is, of course, just going to be information based on my own research, the IRS's website, which I will definitely link in the show notes. I'm also going to be pulling some information from Julie Harris's book Profit First for Therapists, which I've mentioned before, and also will be linking that in the show notes.
Speaker 1:Ultimately, a lot of this decision, there's going to be some very state-specific legal considerations that you're going to want to make. So ultimately, the most important thing is that you want to check your state's laws. Honestly, between me and you, a quick Google your state and employment law, you can kind of see what it says. Because I think that's one thing that I do see a little bit more is that there are states that basically just making it a little bit more I don't want to say difficult, but like there's a more emphasis on hiring a W-2 employee, and I'm hoping after this episode you'll understand why. Because I think a lot of people hire people as independent contractors but are treating them like an employee. So states are like, hey, you need to be paying those taxes, basically. So we will talk lots about it today and hopefully it will be a helpful discussion.
Speaker 1:Before we get into that, please be sure, as always, if you haven't already done so, make sure you are following, liking, subscribing, wherever you're getting your podcasts, if you really enjoy the podcast, leaving a review or adding a star, whatever, a five star, whatever star you think this podcast deserves, it would be super helpful. Of course, if you are not a fan of the podcast, you can go ahead and disregard that last statement. The other thing, just as a reminder starting in August, so next month, we will be doing a column slash advice, slash business question segment at the end of the episodes and if you have a question, a business question or looking for some advice, I would love to hear from you. I already have some questions come in, which is really exciting. So if you would like some advice or a question answered during that segment, you can reach me a few ways. I actually just launched or made public an Instagram account just for this part of my business, so for my business coaching and the podcast, of course. So that is at RD to CEO, so you can go ahead and follow there and send me a message or a voice message. If you have a question there, you can do that. You can also message me on my other Instagram account, at evahaldus, underscore RD. I also have a phone number, which all will be linked in the show notes, so you can reach me in any of those ways. You can, of course, go to the website as well and throw something into the contact page there, but I would love to hear a voice note because then I can actually play it and people can hear your voice asking the question. So that will start in August and I'm really excited to answer some listener questions.
Speaker 1:So without further ado, then let's get into talking about hiring an employee hiring for your business, w-2 versus 1099. All right, so as we dive into this topic, I think it's going to be really important first of all to just define the two terms and explain what they are and what we're talking about. I will say I will probably do this a few times interchangeably I'm going to switch between for W-2, I might say W-2, I might say W-2, employee, I might just say employee. So when I'm saying those things, I'm going to try to stick with saying W-2 as much as I can, but I'm sure it'll just naturally. Sometimes I'd switch over and you'll hear people say that as well. So when I say W-2 or W-2 employee or employee, I'm referencing the W-2 category and then 1099 or independent contractor or 1099 contractor or just contractor, that's going to be under that 1099 umbrella. So let's start with that disclaimer there.
Speaker 1:But the main two things. So first of all, before we even talk about what the differences are, basically the two things that these are. They are forms with the IRS and basically they are both tax forms. And this is for, obviously, the US. That will explain basically how much money you are getting paid. And so a W-2 will have your wages and tax statement. So at the end of every calendar year your employer will hopefully have this put together through their payroll and sent to you. You get a W-2 in the mail and that's what you're going to give to your account. But that gives a summary of the wages that you are paid and as well as any taxes. And then a 1099 is going to be just a summary of payment. But typically with 1099 contractors there are not taxes withheld, so it's mostly just here's how much money you were paid by whatever company.
Speaker 1:Let's talk a little bit about the two categories and what they really mean and some of the key characteristics of them. So, to start, let's talk about W-2 employees characteristics of them. So to start, let's talk about W-2 employees. So a W-2 employee is exactly that you are an employee of the business. What that means is you're going to be on payroll and there are going to be taxes withheld from your paycheck, part of which are going to be paid for by the employer, part of which are paid for by you and withheld from your paycheck paid for by you and withheld from your paycheck.
Speaker 1:There are some benefits to being an employee of a business. There are legal protections at play. Some states have certain things that they require are offered to employees. For example, while we are based in Pennsylvania, I have an employee that lives in New York and employees in New York state are required to have paid family leave and short-term disability insurance. So that is something that I have paid towards through the state for employees that are in New York, whereas in Pennsylvania that isn't a law. So there's different legal considerations, but also legal protections as far as things like FMLA, like Family Medical Leave Act. So certain companies are required to allow you to have that time, other protections as an employee that you wouldn't get if you were not a W-2 employee, if you were a contractor. So that's one of the, I think, benefits of being a W-2 employee and even hiring W-2. W-2 employees are also eligible for things like unemployment insurance. W-2. W-2 employees are also eligible for things like unemployment insurance.
Speaker 1:There's also a lot of parts of the job that are provided to you from the employer, so, as the employer. So if you're the person that's considering hiring somebody, you know there are going to be parts of the job that you are required to pay for for your team to be able to do the work they need to do right. So if, like, there's a system that you use, so for us it's like let's think of it like as, like, our electronic medical record system. You know I pay for that. There are certain aspects of the computer Like I tend to. I feel like this is something that I've purchased for almost all my employees is a second monitor, makes it easier to take notes, especially because we do so much work virtually. I'll pay for other things and reimburse other things. Trainings, resources, books, these are all things that are provided to my team, my employees as their employer, and one of the other distinguishing factors that is, I would say, a big key point of the employee EW2 model is that their work hours are set by the employer and also the work itself is set by the employer. So employers can then say you know which hours you can work and how you're going to do your job, having to, let's say, like you see a client, the requirement is that you finish your within 24 hours. We have standard operating procedures, so like if we have a new person reach out, you know they need to be reached out to and followed up with within 24 to 48 hours. These are set standards of the job that are set by me as the employer, and I can actually enforce that with my team.
Speaker 1:If they're W-2 employees, so conversely, a 1099 or an independent contractor, once again this is really going to be someone that is more so like separate entity from your business and they oftentimes are self-employed, so they're going to pay their own employment tax. They'll pay their own taxes. Typically, they're not withheld the employer. You as the employer would not be responsible for any of the taxes that you would pay an employee, like things like social security, medicare, some of the federal and state unemployment taxes, things like that. So with 1099 contractors you're just paying them the set amount that you have agreed to pay. Oftentimes 1099 contractors will also pay for their own expenses because they are their own business entity. One of the other things they may pay for themselves own expenses because they are their own business entity, one of the other things they may pay for themselves is liability insurance. It wouldn't be on the employer to provide that for the contractor if they are an independent contractor.
Speaker 1:And then one of the other key distinguishing things here to consider is that as 1099 contractors they can make their own hours and really the employer cannot really tell them like how or when to do their work, only like what is the work. So what is the task, what is the job? That is what needs to be done, but it can't really be dictated by like what hours it has to be done in or by, because that is much more of an employee thing. So really those are the two main, I would say, like distinguishing features of the two groups. But if we really want to just like think about it like you know, I know I just listed a couple things and I'll put some links in the show notes of you know kind of breakdowns from the IRS's website.
Speaker 1:But really, the main thing you want to think about here is, like, when I think about a W-2 employee, I think about someone who has once again, it's like on the team, has responsibilities and expectations that are set by the employer, by the company, on how things are going to be done, whereas an independent contractor, or 1099, is really someone that is hired to do a specific task or a specific project or something that's within a certain time frame that's typically short-term. Now, it's not always short-term, I would say, but it's oftentimes consultants or something like that would be a contract position. And so the thing about independent contractors, there's a contract, right, there's like a here's the timeline, here's what the job is that we're going to have you do, and that's kind of what it is. And so one way that I try to think about it from like more of like, maybe like an analogy or just an example is when I'm thinking about hiring clinicians and I think I've said this or alluded to, at least so far, when I'm explaining this is that my clinicians on the team are all W-2 employees, whereas our insurance biller is a 1099 independent contractor. So I think it's like a really good example because our insurance biller she has a very specific task that she does, which is do our insurance billing and that is her job and that is what she does. But actually there's nothing that I've ever dictated or provided her that has to be done by you know, a certain time. She's sort of set that herself and obviously, as like the person that's hiring, if you're the person that's like hiring the 1099 contractor, if it's not like up to par with what you want, you also have the right to not work with that person. So obviously, with my ability, it works out because she does it in a way that works really well for my practice and our team.
Speaker 1:But she has her own. It's like she's her own business entity. She actually works for a couple of practices and does this for a couple of practices. So she's paying her own expenses, her own employment taxes. That is all done separately on her own. We just pay. The rate that we have established is what the rate is going to be, based on the service that she's offering, which for us is insurance billing.
Speaker 1:So that is a really good example because she doesn't need anything from me to be able to do that other than the only thing that I pay for is I give her is so that she has access to our EMR. I have to pay extra only because that's just the way that the EMR is set up. I'm sure technically you could make somebody pay for that, but or that could be like a deduction from, maybe from their rate, or that could just be something that you negotiate based on what you pay them. But you know, for me it's like $10 a month, I think, just to have her have access to it, because she obviously needs that. But actually the other things and those are things we pay for, for example, our clearinghouse I still pay for that because it's something that my practice needs to function, but it's not something that she needs for my practice to function or to do her job with my practice. Does that make sense? So it's much more the things that she will pay for that I don't have to pay for. Like I know she has her own system that she uses to keep track of things. Like I don't pay for that, right? So that's her own thing that she does. The only thing that really is coming out of my pocket outside of paying her is giving her access to our EMR so that she can obviously bill our clients, where, conversely, our clinicians right, they're given, obviously, access to the EMR but we also pay for them to have an email. I cover liability insurance, you know. They're obviously on the payroll, so there's taxes that are paid on their behalf.
Speaker 1:We offer benefits. There are other resources that we've sent. I think I said, like monitors is one thing, books that they need, whether there's like computer stuff need, whether there's like computer stuff, like a lot of different employers will provide different things. It's sort of depending on your job and what your employer provides, but that is basically what is offered by the employer, aka me. But the other thing is we also have standard operating procedures. Right, there's expectations that I have. So there's client amount that we work towards. But the other thing is, is that we, because they're W-2 employees, there are set hours, there are, you know, for us it's more so like the goal of you know X amount of clients. For us it's like 20 to 24 a week and you know things like getting their notes out on time or answering emails within a timely matter or doing other things that are like we have required meetings once a week, things like that. So those are expectations of how and when the work is done.
Speaker 1:The other main thing for us and this is really probably why I went into hiring with dietitians right off the bat with the W-2, is it was really important for me to be able to say how I wanted something done from a clinician's clinical perspective. So what that means is, you know, we work with eating disorders, we work with sorority dating, we work from a non-diet approach, and so it was really important for me one to make sure that the clinicians that worked on our team were aligned with that, that had the resources necessary to work from that perspective, and we're also required to do supervision with me so that they can continue to learn and we can make sure that the approach that they're using is the one that is in alignment with the practices, values and goals, and so that was really important to me to have a say over how things were done, and that's really one of the key reasons why I went the W-2 route in the first place. So that's sort of something when I think about it, when I think about things like doing a certain task versus more of that longer term has a job. The goal, of course, is that when you work for a company as a W-2 employee, that you're going to stay there, that this is your job, this is your career. My goal is to have employees that have a livable wage and can have benefits and all these things. That's what I'm working towards constantly, that I have a livable wage and can have benefits and all these things, right, that's what I'm working towards constantly, and so it's much more long-term, whereas if you have, like a 1099 contractor, right, that's going to be much different. That's going to be separate or short-term or for a specific task.
Speaker 1:I'd hired administrative assistants and VAs in the past when I was in my first couple of years, before hiring our most recent administrative assistant, nicole, who is a W-2 employee now. But originally I had a VA and admin who were 1099. And I just that always felt like something was missing, probably because it was like they weren't really a part of the team, right, like they didn't come to our team meetings weekly. I mean, I didn't really have them back then either, but it was a little bit different because they were doing much more like specific tasks and there really wasn't a say over like I want this on this day. I want this on that day, like, it was just much more like hey, can you do X task, cool, that was kind of it right. And so that was really a disconnect for me and really wanting somebody who was going to be part of the team, sort of like in-house with us doing all the things and growing with us, was really important for me when I was considering hiring more involved administrative assistant, and that's why I went the W-2 route the second time around when I actually did hire Nicole to join our team last summer.
Speaker 1:Another kind of way if you want to think about it is if you accept insurance at the end of the year, typically I mean I feel like we usually get them all insurance companies will send you a 1099 because they are paying you as sort of like a contractor or you know someone who's doing a specific task and they're paying you to do that task. Like for us, right, it's like nutrition counseling, right, they, they are giving you money, they're paying you money for that time and we are considered 1099 contractors basically to insurance companies. If you think about it that way, right, like, but insurance companies can't necessarily tell us what we can or can't do. I mean they'll. They'll tell us what they won't pay, right, but they're not like setting like you have to do it this way, like they can dictate like what they'll pay for, and that's kind of a separate thing, but that's something, I think, kind of a way to think about it, right, when you're thinking about the difference is like how you get a 1099 at the end of the year from insurance companies, is that's kind of what a 1099 is, right, you don't work for them but they pay you. So it's kind of like that.
Speaker 1:I think one of the biggest hurdles or fears or challenges that people feel like hiring a W-2 employee versus a 1099 is that it's either going to be like really confusing tax wise or it's going to cost more. I will say this, and I feel like I always share it online in different Facebook groups I'm in, I use Gusto for payroll and I'm going to put my affiliate link in there. The main thing that the affiliate link does basically is they'll send us both gift cards if you use it. But aside from that link, even if I didn't have that, I would 100 million percent always recommend Gusto because I just found them to be so helpful and user-friendly when it came to setting up employees. You can also pay your contractors through Gusto, which is nice, because then they'll create the forms that you need to send at the end of the year and kind of keep track of all that stuff in there. So I pay my biller through Gusto as the contractor.
Speaker 1:However, the payroll company that you use, I mean they should hopefully be helpful. You can certainly hire somebody to do it for you, but Gusto is just so super helpful. They have so many resources on their website and when you put somebody in and they enter in their information, like their address, they'll tell you what tax information you need. Like you need this account number and then it'll give you a link to like where you can find the form that you need for that or the phone number that you need to call for that. You to like where you can find the form that you need for that or the phone number that you need to call for that. You know your account maybe will also help you with some of those things, if there's things that you're stuck on like. My account has helped me with a couple of those things in the past as well, but I will say like I've only ever used Gusto, and so they have just made the process really easy. They also have connections with other companies.
Speaker 1:So, like when I had hired my employee that lives in New York, there's a couple of things I had to do and they have, like, I mean, I think I paid a little extra for it, but they helped me set up some of the stuff that I need to set up in New York in order to have an employee in New York, even though our business itself is in Pennsylvania. So cannot speak highly of it enough. Like, if you're feeling stressed about it, I promise you Gusto will ease that stress very quickly and there's just lots of resources online on there as well. And I mean I will even say this I once again because I'm used to doing things in Pennsylvania and then having a New York employee. There was one thing that I had lapsed on, but it was honestly sort of my fault because I wasn't opening my mail in time to see that I wasn't paying towards something that I need to be paying towards and then I ended up paying a penalty. But Gusto was, like, really helpful and helped me figure it out. There was like another situation that I had with Philly. Once again, it was sort of my own wrongdoing, but Gusto did certainly help me through that process.
Speaker 1:The other really nice thing is I think people get afraid of if they have a W-2 employee is like how do you pay the taxes on that stuff? Once again, gusto takes care of all that stuff. So once you have it set up of like where your business is and then where your employees live, it helps you and they will do and file all the taxes that you need and file the other things that you need and there's, you know, different like reports you can pull and all that stuff. So it just makes the process so much easier. So like, if you're feeling nervous about it, just know that there are really great tools out there that make it very simple or like much more simple than you know just having to like look all over the internet for it, basically. So I will say, just from like the scariness of it all, gusto is wonderful. I'm sure there's other payroll companies. I've heard other people use, I think, adp. I think you can do stuff through QuickBooks. But I'll say I think people that use Gusto will often recommend it and so this is obviously not an episode about Gusto, but it feels like it is. So, as far as the stressfulness of that all, I think that can be taken care of very easily through whoever, however, you do payroll.
Speaker 1:The other thing that people get worried about is like what is it going to cost? Is it more money? Ultimately, yes, having a W-2 employee is going to cost you, the employer, a little bit more money. However, I find that when people hire a contractor, they tend to pay them higher per hour versus somebody that's a W-2 employee, and there's a couple reasons for that right. So if I had an employee which I do and I was going to pay them, there are other things that I'm paying on top of that right. So, once again, like the things I had listed, like things that they need to do their job liability insurance, our ERMR resources, yada, yada, yada. So there's a lot of expenses that are also paid for by the employer, but just in terms of payroll itself, employers also are going to be paying a payroll tax, and so there is a little bit more that you're paying in addition to that hourly rate. That's something I didn't really consider, or even know about, I think, when I was first hiring. So how I was setting my rate, kind of like the rate that I was paying employees was. I was like, oh, I'm paying more than that, so that's something that you want to think about.
Speaker 1:I did actually pull my last report of our last pay period just for like reference, like it's not a ton of money, like it is, but it's not if you think about it like in the grand scheme and what I always tell dietitians who I'm working with for coaching when they're first starting out, you know, typically as private practices we're paying people hourly for clients they're seeing and so it's not like your employees are going to be seeing a ton of people right away. If they were, they're getting paid for that time, like whether it's cash pay or insurance. So it's like it's not like the money is not coming to you at some point and they're still starting off slow, so it's not like you're spending $100 right away. So, looking at the last pay period I pulled up the report. Cost pay period I pulled up the report.
Speaker 1:So if we look at it as from like a total of, let's say, gross pay, so like wages earned, the amount was $7,255.96. Of that, $591.12 were employer taxes that were paid on top of that. So if we look at that from a percentage standpoint that's about 8%. So that's kind of and I think that's what in private first-year therapist Julie Harris, I think she puts like 8%, 10% as something you want to think about. But if you're just first starting out hiring people, right, like, once again, keep in mind, if they're only working five hours, you're only gonna be paying like 8, 10% of that. It's really not that much on top of it, but there is still money on top of it, cause that's, I think, the other misconception that sometimes people have is, let's say that they're like okay, here's like, if you were, we'll just for simplicity sake, say say, like your cash pay rate is 150 and you're paying your employees $50 an hour, you're like, oh my God, I'm going to get $100 back like profit from that. But really, if you think about it, right, like you're going to be paying per that hour, per that time, you're going to be paying the employer taxes and all the other expenses that are going to come into it. So like, for example, to use Gusto, I pay a fee, a monthly fee, for that. Right, I have to pay unemployment insurance. That's. The other thing that's not in here is that I also pay unemployment compensation, which also isn't significant but nonetheless can add up.
Speaker 1:There are things that sometimes are due all at once. You know it usually is in the first quarter that you're paying. You're like, holy shit, where's all this money going to come from? I feel like I'm spending so much money. So it does add up having employees where, whereas if you just have the contractor right it would be, you pay them for the you know rate of like, hey, if you're seeing this client, this is what you're going to get.
Speaker 1:But and there's a big but on this when we really want to think about this and this is really where I think it comes back down to and this is like the whole point of this podcast right going from that RD who sees clients to really being that CEO, that business owner making a decision, you want to look at this from a bigger picture standpoint and really is like at what cost is it worth it to save that money? Because we are going to be thinking about this from a bigger picture standpoint and not just I want to hire somebody to do a task and I'm talking about that mostly. What I'm saying is for when you're hiring a clinician. If you want to hire somebody to take on a couple extra clients like, say, you are a private practice owner and maybe you are expecting and you're going to go on a paternal leave, and you're like, okay, I don't actually want to be a group practice owner, but I have all these clients and I also don't want this like lapse in time where I can't see clients. I was like that would be a scenario that maybe you'd want to put somebody in as like a 1099 to cover you as, like the person. But if you really are thinking about growing your team and growing your business and having a more long-term plan, I believe that a W-2 is the better route to take because and I know I'm talking a lot about money it also takes a lot of time to onboard.
Speaker 1:Whether it's a 1099 contractor or an employee, you still have to train people. You have to teach them how to use your EMR. You have to teach them how to file notes the way you want to take. You have to show them different things. You have to meet with them. If you take insurance, you either have to pay somebody a credential to them or you're going to do the credentialing yourself, like I do. You're marketing for them. You're doing all this stuff.
Speaker 1:There's a lot of work that goes into hiring and onboarding, and so to have somebody who's going to be there for a short term, like it's not a long term plan, that will be, I think, beneficial for most people Because ultimately, you know, you can't really have a say in how they're going to do things. I mean, you can certainly give feedback, but, like the other day right, like as we talked about, there are not as many regulations on things that you can tell a tenant and contractor how to do something versus when they're an employee of your business. You can, and so that's really where I tend to give my biggest recommendation when thinking about hiring, especially when we're talking about clinicians, is, if your goal is long-term to develop a team and to grow and have this group practice, having a W-2 employee is going to be the route you want to take, and the other really honestly big point that I haven't mentioned yet is that there's a lot of potential legal issues and tax issues. I was looking through some Facebook threads as I was getting ready for this episode and there was somebody that was writing about how they're a contract worker for a company and the person they're working for wants them to have like something done within 24 hours. Now they're like upping that and everybody in the comment was saying they can't tell you what to do because you are a 1099, you're not an employee and like that's the key right.
Speaker 1:Like there's so many times where or like say, people bring somebody on as a 1099 and they're sort of treating them like an employee. There are certain situations. I know somebody who's currently paying somebody as a 1099 because they're transitioning them to a W-2. It's short term, it's not long term. I think that's okay. I think we just really want this for a long term period.
Speaker 1:If you're having people who are 1099s for you for a long period of time and then you're treating them like an employee for a long period of time, there are some considerations you want to make sure you're taking because that can put you in some legal mess and you don't want that. Nobody wants to deal with that later or be audited by the IRS later and be like, oh my God, you haven't been paying all these employer taxes and clearly treating people like employees but paying them as a contractor. So that to say that's, I think, the more scary legal thing that people are not worried about when they're thinking like, oh, I'm nervous to do a W-2 because it feels more complicated. So I'm going to go the 1099 route, long-term. That might give you a bigger challenge legally if you start treating somebody like they're an employee when they're actually 1099. So all that to say.
Speaker 1:You know, as we're thinking about this, the main thing that I always think about in this way when I think of my analogy, in summary, is a contractor is someone that's being hired for a specific task, specific project, tends to be short-term, and a W-2 employee someone that's being hired for a specific task, specific project, tends to be short-term, and a W-2 employee someone that's part of the team. They're part of the business and there's more investment into them. They're also given more opportunity for benefits, something that's going to grow with you and I think, as small business owners that are growing teams, that's really the route that's going to be the most return for investment. Honestly, right, I always say this like, of course, I would love for my team to work with me forever, but like the reality is that they're probably, one by one, eventually going to leave. Right, my goal, of course, is I always say, my goal is to, like, give them a reason to stay, not be afraid that they're going to leave.
Speaker 1:So I and that's because that's a value that I have as a business owner is that I want to have a place that's like a positive workplace. I am such a people pleaser and I've talked about this before of, like you know, always being nervous about getting in trouble, and it's one of the reasons why I want to start my own business, because I don't want to like have to answer to anybody else, but I also don't want to be the boss that people are like afraid to ask things to or or create a toxic work environment or a non-supportive work environment. So it's really important to me and this is like one of the things I'm working on outside of. You know, doing all this running a business and yada yada is like learning how to lead a team and help people to feel supported, cause that is really important to me. Ultimately, it might not be a fit for everybody that works for us. That's okay. I'm okay with that. I'm going to continue to live and work in accordance to my values and hope for the best and keep learning as I go, but ultimately, I always say to people I'm not going to stand in the way if somebody's like. You know, I think I'm ready to start my own practice, or that's what I want. That is something that I ask people during an interview question, like do you want to start your own practice one day? If so, awesome practice one day? If so, awesome. I'm here to support that.
Speaker 1:But my team I really do try to hire people who are like I want to work in private practice, but I don't want to own my private practice. I don't want to be the person in charge of this. I don't want to do the admin work. I don't want to have the background stuff that goes along with having and owning the actual business, but I want to do the private practice work. That's always the right fit for my team. So I try to make their employment positive because I want people to stay. But, like, the core model of that is because they're W-2 employees, right, and so that is the thing. That's like the foundation that's allowing me to do all the things that I'm trying to do to grow my team. But if they were contractors, there's a lot of things I wouldn't be able to do.
Speaker 1:We have weekly team meetings and I will say I mean, obviously, when I had my first employee, it was just me and her. But as I've grown, my team having team meetings has been so helpful. I try not to be one of those meetings that's like this could have been email, let's be honest. Sometimes they probably are. Sometimes they're a little bit chaotic, but I really try to make them. I try to make sure that they're meetings that are purposeful and not like a waste of time, and I do find that it also really helps for, like, team building and camaraderie and support, and you know my clinicians feel like they can lean on each other for support as well, which is really really important too. So there's a lot of parts of it that having a W-2 as a foundation has allowed for our team to have, and I think it's really the most beneficial long term.
Speaker 1:I will also say I've heard of many people who have started 1099 route and then they switch over and listen, it's not too late, like don't panic if you have hired 1099. You're like oh no, am I doing something illegal? Like I said in the beginning, ok, first of all, I'm not an attorney, right, it could help to just talk to somebody in your area and assess what's going to be the best route for you, depending on the state that you live in. But nothing is permanent, so you can always make the change. But I think if you're in those early steps of trying to decide what do I want to do no-transcript put it, or like they're.
Speaker 1:You know we're re-nourishing. They might not be eating enough. We want to make sure they're getting adequate energy intake and all those things right. And then the next step might be okay, they're eating consistently. We're starting to work through some body image stuff, but they're starting to get some more of their like natural cues, things like that, like some readiness for intuitive eating. But I mean, that's quite there yet. That's sort of like the next step. And the third one is like they're eating really consistently. You know we'll see like a reduction or elimination of, maybe eating sort of behaviors, definitely getting more of those like cues from intuitive eating. And right now we're just like fine tuning.
Speaker 1:So those are usually like the three things we say. So we like zoom out on it with clients. We'll say like that's sort of like the three stages Now, like let's zoom back into where we are with things right, and so like maybe they're the first step. And I think that's the same thing that we can think about with business. And I will say, like, as an impulsive person who has, like, made a lot of my business decisions on the fly and quickly and not having a bigger picture maybe in the moment, I will say I do often at least now more so, since I've started the process of really shifting my business mentality is how am I thinking about this more long-term, even from small things?
Speaker 1:I had my first employee who's on maternity leave, and we were talking about how do we navigate this with insurance and this and that and like? It's something that has worked with me for a couple of years I actually known her for a couple of years Like out of the like, there's parts of me that wants to do things. Sometimes that's like I'll just pay for like this or I'll do this whatever. But I have to really think about this like bigger picture, more like long-term. If I had six employees going through this right now, would that be something that's feasible for my business? If I had multiple employees going through this, how would that work?
Speaker 1:I have to really think about a bigger picture because I want the business itself to be sustainable. I want it to grow. As clinicians, we're growing right Like. We're seeing caseloads that are fulfilling and my team is being compensated more, adding more benefits or doing other things right Like growth might look differently for everybody, but really it's like what are we working towards?
Speaker 1:And I sometimes don't even know that right Like, I've never really been one of those people that's good at like long-term game planning, but I will say this is one of those things I think is really important to really think about more long-term and bigger picture and, honestly, just like to save yourself the headache Like I know up front it feels scary You'll be so glad that you did it. When you do it, I promise you, if that's like your goal is to build a team and to have somebody that like really is going to involved with and you wanna have a say, like I said, on what they're doing. So that is the long short of it. I hope this was helpful. Sometimes I think what I'm like talking it through, it does seem more complicated than it is. So I hope this was a helpful breakdown of things. Like I said, I'm gonna try to find some other resources to like.
Speaker 1:If you do have the Profit First for Therapists book, page 175 has a good chart and it's actually page 174 through like 177, maybe a little bit more. Well, the chapter itself is on team compensation, but in that part exactly it talks a little bit more about the contract versus employees. The one thing I'm going to read from the book that I thought was really helpful and kind of like summed up how I feel about it. She says I've noticed that for new group practice owners, hiring a full-time employee feels like much more pressure than hiring a part-time contractor. Doubt can creep in with questions rolling in your head like what if there aren't enough clients for both of us? Or what if I can't fill their caseload? Overall, though, employees tend to generate far more revenue for your practice than contractors, and I think that's really important.
Speaker 1:And the other thing, they also have somebody a quote from another therapist who hired the employee versus contractor experience. This person, gordon Brewer, said when people shy away from having employees, I would say really look at the numbers. My practice became much more profitable after I started hiring employees. They're happier too, and I've had much better retention since then, and I think it's because it's like you know what's the saying like the grass grows where you water it, or whatever. Having employees like you can really invest in people and grow your team and not just like for you, but for them too, right, like I always say to my team, like, of course, I want them to see more clients, because it's what's helpful for the actual business to run and function and be able to do things like offer benefits and all these other resources, but I also want them to make a good living and support themselves and do work they love, and so I think that's also just really, really a key thing. So I think we'll end it on those two quotes from the Profit First for Therapists book.
Speaker 1:I'm curious after listening to this, do you feel more confused? Do you feel less confused? If this is something that you have more questions on, or more clarification on, or wanting more clarification on? That would be a great question to add for our advice slash business question column starting in August. So remember that if you have something to shoot me a message, whether it's on Instagram, with either Instagram at RD to CEO or at Eva Haldus underscore RD I'd love if you send me a voice message so that I can actually play it in the episode, but you want to just type it out? That's also good too, especially when it comes to this topic. I'm happy to talk more about it if it would feel helpful.
Speaker 1:Otherwise, make sure you are following along. If you haven't already done so, and go to our website. You can join our mailing list. I send emails maybe once a quarter, so you can expect probably that to continue for a little bit for the time being, and it can also be just a good way to stay tuned with other things that come out. Hopefully I'm going to try to sum up some of this W2 versus 99 stuff in like a free handout or something, or put something on the website, because I think sometimes visually seeing it can be helpful too. So if you join the mailing list, you'll know when that's available.
Speaker 1:If you have any other comments or topics that might be interesting for you to hear about on this podcast, I'd love to hear from you in any of the ways that I've mentioned so far. All of those things will, of course, be linked to the show notes, as well as some of the things I've mentioned today in this episode. Thank you all so much for listening. I'm recovering, possibly still with COVID, which is why my voice is a little bit rasper than usual. So thanks for sticking through it and listening, and I will talk to you next time Bye. Thanks for listening to the RD to CEO podcast. Be sure to check out the show notes for any resources mentioned or find more at wwwrdtoceocom. Never miss an episode by subscribing wherever you get your podcasts. See you next time.
