Medical Transcription Work as an Independent Contractor
Many companies that hire medical transcriptionists want to hire them as independent contractors (ICs). In job listings, you’ll see this indicated as IC status. It means you and the hiring company are two businesses contracting with each other, instead of employer and employee.
Here’s what being an IC looks like for you and the hiring company:
The hiring company doesn’t have to pay employment taxes on your behalf. That becomes your responsibility.
The hiring company doesn’t have to provide and administer benefits or handle employee-related matters. It just cuts you a check and moves on.
The hiring company can specify what you do (like produce x lines per week or turn around reports within 24 hours), but it can’t control how you do it (for example, the hours you work or where you work from).
If you take a job as an IC, you’re doing nothing less than deciding to launch your own business. You’ll still have to work to get paid, but you’ll have a lot more control over the when, how, and for whom.
You’ll also be responsible for stuff you may never have managed before, such as self-employment tax. Being in charge of your own work life is a thrilling proposition. It also can be a little scary. Welcome to self-employment!
The financial keys to making IC status work in your favor include setting up a good recordkeeping system from which all else financial will flow, and how to stay on Uncle Sam’s good side when it comes to taxes. After you read up on all the details, net income may be your new favorite term.
So, what’s the difference between an independent contractor, a freelancer, and a sole proprietor? An independent contractor is a person or business that provides services to other businesses.
Freelancer is just another name for independent contractor. And sole proprietorship is a term used on income tax forms to refer to an unincorporated business owned and operated by one person; it can be operated under the owner’s name or under an assumed name, such as Magnificent Medical Transcription. (Fictitious business name and DBA [short for doing business as] are just different ways of saying assumed name.)
If you’re working on your own as an medical transcriptionist (regardless of whether you have a business name) and you aren’t an employee, you’re an IC or freelancer, and if you don’t incorporate your business, you’re a sole proprietor, too.