Working as a 1099 contractor at group practice can be a great start in the private practice arena, though there often comes a time when you need to pause and ask yourself: “Is it time for me to consider becoming a PLLC?”
One major indicator? Your income. If you’re billing more than $55,000 a year, it’s worth seriously considering this next step. Why? Because once you become a PLLC, you can set up a payroll system where your 1099 payments go directly into your business and you become a W-2 employee of your own PLLC. That shift allows you to start managing your income, taxes, and benefits much more efficiently.
Creating a PLLC opens up access to retirement options, the ability to set up business health insurance, and write-offs for business expenses all while making tax season a lot less stressful. Instead of dealing with one large tax bill at the end of the year, a payroll system allows for your state, federal, Social Security, and Medicare expenses to be automatically deducted with each “paycheck.” It’s cleaner, more structured, and protects your long-term financial wellness.
A big reason therapists often hesitate to begin a 1099 position is the lack of benefits. But with a PLLC, you can look into providing your own benefits to yourself. That means you’re paying your health premiums pre-tax, which can save you money compared to using other insurance purchasing options.
The Perks (and Power) of Paying Yourself as a W-2
Structure, control, and strategic savings
Once you’re set up as a PLLC, you can decide exactly how much you want to pay yourself and when. Maybe you don’t pay yourself during vacation weeks, or you set up automatic retirement contributions from each paycheck. With a payroll platform, it’s all customizable and manageable. Many platforms are user-friendly and work just like an app, pulling funds directly from your business account based on what you’ve scheduled for salary, taxes, and deductions.
Even more importantly, your taxes are managed throughout the year. This not only helps you avoid a surprise IRS bill in April, but it often means your business income and W-2 income can offset each other, which may result in fewer taxes owed or even a refund come tax time.
You also gain clarity around your business expenses. Need a laptop? Software? Clinical tools or office furniture? If it’s for your practice, you can use your PLLC funds, and those become tax-deductible expenses. Yes, you can do this as a 1099 contractor as well, but the key difference is: with a PLLC, you’re taxed at a different rate, and you have more options for long-term planning, saving, and protecting yourself as your own boss.
Start with Intention
While considering becoming a PLLC isn’t the right move for everyone right away, if you’re bringing in at least $55,000 annually and plan to stay a 1099 contractor for the foreseeable future, now is a good time to start planning and researching. Talk to a certified accountant or tax professional to see how this step could benefit you specifically. With the right structure, you’re not just working, you’re building something. And that foundation can support you for years to come.
