How to Become an Independent Contractor

You ask, “Why would I want to leave the security of a job where I receive a consistent paycheck and benefits”?  My question to you is:

• Do you love what you do now?
• Is your job fulfilling?
• Do you wake up every day excited to go to work?
• Would you like flexibility in your schedule?
• Would you like control over which cases you accept?
• Would you like to be fairly compensated for ALL the hours and effort you put into your job?
• Would you like to work with a team of professionals instead of being a “lone ranger?”
• Would you like to make more money?

You see, all of these things are a part of being an independent contract/Nurse Case Manager.  You are your own boss.  You work around your families’ schedule.  You accept referrals as you see fit.  The work you put in comes back to you in monetary compensation….ALL those hours.  The compensation for an independent contractor is much higher than what you can make as an employee.

Becoming an independent contractor requires that you make the decision to be one.  You find out what your local county or government requires to run a small business (license, doing business as (DBA) etc.).  A lot of times this lies in the jurisdiction of your County Clerks’ office.  You need to figure out what your company name will be (you can just use your name, which makes the process easier).  You will need to file for a Tax ID number with the federal government for tax purposes. Learn More about getting an EIN here.

You will need to set up a post office box at your local UPS, Fed-X or post office so that you have a business address.  They will set this up as a suite so that you look like you have an official office. 

You can set up a separate phone (cell or land line) to place on business cards and other marketing material or you can use your current cell phone or land line.  Just note that clients may call you or text you at all hours.  This is where boundary setting will become important.  Voice mail messages should provide not only your name and business information, but also your hours of operation.  Then you do NOT answer phone, text or emails outside of those designated hours of operation.  This allows you to have a life!  You will also need a secure email address as HIPPA compliance regulations have gotten stringent on protected health information.  Whatever email service you currently use, contact the provider and ask about a secured email server.

After all of these things have been completed, you will set up a bank account in the name of your business.  It is good to have two bank accounts, one for general banking purposes and the other for your taxes.  I transfer my tax money to this second account every time I receive payment for services and never touch it until my taxes are due in April. 

Order some business cards (there are several inexpensive options Online that allow you to design your own) or you can use the services of a branding agent (a person who specializes in designing logos, brochures and other marketing materials). 

You will also need some type of invoicing system or way to keep track of hours worked.  Most companies you subcontract with will have their own way or software to help with this, but it is always good to have your own for back up purposes.

You then start networking with other nurse case management companies, groups or organizations in the area of your expertise.  You can also do this prior to setting up your independent contractor business to test the market and see if there is a need for your expertise.  Worker’s Compensation is one of the biggest markets that use independent contractors for case management services. 

Other case management companies are always looking to contract with Nurse Case Managers to cover their service areas.  They will provide you with a written contract to work with their clients.  This is a great referral source, especially when you are just getting started. 

Benefit Resources

As an employee, we are used to receiving a benefit package from our employer.  This benefit package is the one thing that keeps us from leaving a day job (firing our boss) and becoming an independent Nurse Case Manager.  I told myself this for a long time.  It was simply not true.  The same benefits are available to you as an independent Nurse Case Manager.  A lot of times, they now come cheaper than if you are “sharing the costs” with an employer.  Below are a list of the benefits we are used to receiving and some resources for obtaining these benefits on your own!

Health Insurance-Private health insurance could be cheaper than what you are paying now with an employer.  An employer’s health insurance premium is nearly double that of a private paying individual.  Here is a link to obtain several quotes on insurance for you/and or your family members:
www.ehealthinsurance.com

You can also purchase short term and long term insurance plans through a local insurance agent in the event you have an accident or injury and require time off.  AFFLAC is another option for supplemental benefits to help cover costs of diagnostic testing, hospitalizations and other costs affiliated with medical care. 
Retirement-Starting your own retirement account is easy.  Just like being an employee, you can sign up with Fidelity, Merrill Edge or any other firm that handles retirement accounts in your local area.  Your bank is a good place to start.  You can start what is called a self-employed (SEP) IRA, a regular IRA or a ROTH IRA to meet your retirement needs.  You can roll any other retirement accounts that you might have had from an employer into an IRA.  These retirement accounts will be a tax incentive/write off for you as a business owner.

CPA/Tax Services-You will need a good CPA or Tax person to assist you with your tax write-offs as a business owner.  You will no longer have taxes taken directly out of your pay checks and will not receive a W-2 at the end of the year.  You will instead receive a 1099 with all your earnings for the year from the different companies you do business with.  Your CPA/tax person will use this to prepare your taxes.  Being that you will not have your taxes taken out of a paycheck, you will need to save a percentage of the payments received for tax payment at the end of the year.  You CPA/tax person will be able to give you a percentage of what he/she thinks you should save from each payment received (i.e. 20-30% depending on your projected tax bracket).