Why I Only Hire W-2 Therapists (W-2 vs. 1099 part 3)

I've noticed that private practice therapist tend to hire additional therapists as 1099 contract employees. Reasons frequently cited for choosing to hire therapists as 1099 employees is that they don't have to pay the therapists taxes. While it may be more "affordable" to hire therapists as contractors, in my experience, there are also "costs." (For an summary of the difference between W-2 and 1099 employees read part 1 in this series. To hear about my employment tax audit adventure read part 2.)

According to the IRS website, the general rule for classifying 1099 independent contractor is "if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done" (italics added). It also states that an employee is not a contract employee if the services "can be controlled by an employer (what will be done and how it will be done)" and if "the employer has the legal right to control the details of how the services are performed."

In consulting with therapists around the U.S. I've heard about some of the "costs" of hiring 1099 employees. Some of the costs high turnover rates due to the part-time and often temporary nature of contract employee relationships. Some of those "costs" include lack of control over how and where therapy is done, inability to require specific paperwork, inability to require attendance at staff meetings or trainings, inability to request that therapists network and participate in community outreach to boost referrals.

Here are the four main reasons I only hire therapists as W-2 employees:

1) Overall Cohesiveness

My vision for Wasatch Family Therapy has always been to build a cohesive team with a shared long-term vision of providing excellent clinical services to clients across the lifespan from an attachment perspective, not just have a group of therapist doing any kind of therapy they choose.  Now that we have grown into a clinic of 18 therapists at 3 locations cohesiveness is even more crucial. When therapists are hired as 1099 contractors employers are not supposed to tell the contract worker how to do therapy, or make other specific requirements of the worker, such attendance at trainings.

2) Higher Level of Quality Control

If a therapist is going to work under my name and my practice name or "brand", I want to be able to have a say in how, where, and when they do the work.  I've spend over 10 years building trust, credibility, and presence in my region and I want to be able to be able provide mentoring, direction, and training in how my clinical team provides services.

3) Ability to Require Certain Activities

I want to be able to require certain activities from my team members that hiring them as 1099 workers does not allow me to do. We have streamlined forms for notes and documentation in our EHR system. I require each therapist to engage in at least one outreach or networking activity each month in order to create strong referral sources. I require attendance at two monthly staff meetings, and a certain level of professional appearance at the office.

4) Implication of Long-Term Relationship

I am not interested in hiring temporary therapists to provide services. Hiring 1099 workers generally implies a short-term relationship. I am interested in hiring therapists who have a shared vision and who I can invest in long-term, and who will invest in building the practice long-term. I want to build mutually beneficial relationships not just provide services. Hiring therapists as W-2 employees shows a greater long-term commitment to them to build their practice for the long haul. I also allows me to expect a greater commitment from them.

Would Your Practice Survive An Employment Tax Audit? (1099 vs. W-2 part 2)

Does the state tax commission really take the time to audit small private practices? I didn't think so, until my practice was selected for an audit.

A few years ago my clinic was selected for an employment tax audit. Lucky me, right? When the auditor walked into my office suite and saw many offices with different names on the doors, he looked at me pleadingly and said, "Please, please don't tell me that these therapists are all classified as 1099 contractors."

I replied, "I won't. We're all W-2's."

There was a look of relief on his face.He then proceeded to tell me that health and mental health private practitioners are notorious for incorrectly classifying 1099 employees. In his experience many groups are set up as contract workers when they are acting like employees (I'll go over into detail about the the IRS criteria for how to classify  an employee as a 1099 vs. W2 employees in a forthcoming post).

The auditor requested access to all of my financial documents including bank accounts, accounting,  payroll information and tax documents. He asked us questions about any large checks written directly to employees to make sure we were paying our employment taxes. After a brief review of my payroll and tax documents the auditor thanked me for making his job easier and left with a smile. I breathed a huge sigh of relief.

Had I hired the therapists working with me as 1099 I may have been penalized with a hefty fine and required to pay back employment taxes on all of the therapists' income. I was not in a position to shell out thousands and thousands of dollars. Had I been incorrectly classifying employees it may have put my practice in jeopardy.

Do you know the IRS criteria for classifying 1099 contract workers vs. W-2 employees? It isn't based on whether or not you want to pay your therapist's taxes or want to have them pay self-employment taxes. It isn't based on whether they are full-time or part-time workers. It isn't based on whether or not you provide benefits.

There are many misconceptions about classifying employees in private practice. I'll address theses criteria for how to distinguish between hiring 1099 vs. W-2 therapists in upcoming posts.

Watch for the next Therapist Blog Challenge coming next week, too!

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10 Things I Accidentally Did Right In Building My Private Practice

As I reflecting back on 10  years in private practice I did a few things right, mostly by chance.

With a business license, professional license, and big dreams, I opened a private practice ten years ago. Having never taken a business, marketing, or management course, I have learned "on the job" how to be a small business owner. Hopefully, you can learn from what I accidentally did right and intentionally apply them as you build your private practice.

1) Start small, think big

At the time I opened the doors I was a solo practitioner. Those of you in solo practice know that means I was the receptionist, the billing manager, the webmaster, the marketing specialist...Being a "one woman show" for a few years not only taught me what it takes to run a practice, but also how to teach others what I had learned as the practice grew. My vision was to grow my practice into a group with several practitioners and over time, that has happened.

2) Grow slowly

I didn't know it then, but one of the main reasons new businesses fail is because they grow too quickly. As a mother of 3 children at the time, I was fine growing slowly so I could manage the multiple demands on my time. Turns out it was good for business too. Growing slowly allowed me to build a business without loans or going into debt.

3) Charge more than you think you're worth

From my first day in private practice I have always charged a higher fee than I felt I was worth. This forced me to deal with my own money issues, and to learn to value my own services and skills more highly. I came to understand the value of the perceived value of my services as clients assumed that I must be very skilled in order to charge at the high end of the scale for my location.

4) Think like a business owner

My family of origin tends to have an entrepreneurial mindset where self-employment, flexibility, and freedom are highly valued. This framework helped me to be able to think like a business owner and a therapist and to find an emotional place where those two roles weren't mutually exclusive. Although they are occasionally in conflict, I've found that that is a rare occasion. Thinking like a small business owner has helped me to set better therapeutic boundaries with clients as well.

5) Trust your gut

In all areas of practice, from office location, to logo design, to who to hire, to which practice software to purchase, after researching the best options I ultimately followed my intuition in making key decisions for my private practice. While the path hasn't been perfect, I can't think of one decision where I trusted my gut and regretted it.

6) Hire qualified people that you trust with your reputation

One of the scariest things in growing from a solo practitioner to a larger practice is hiring people who have the power to impact  your professional and business reputation. In addition to hiring very qualified staff, also hire people that you'd trust and train them how to present themselves in a way that builds your credibility.

7) Set strong boundaries with money

Whether it's following through with your office policies regarding collections, or saving for those dips in client numbers, I have tried to be consistent with money policies. This also applies when hiring employees. My tendency was to give away a little too much at first, because of my inexperience. I soon learned that there is a cost, emotionally and financially, to having employees, and that I deserve to get paid for management time and for holding all of the liability in the practice setting.

8) Create a home away from home

Creating a comfortable yet professional office space has helped me, and my clients, to feel welcomed and safe. I've found self-expression in my private office environment and decor helps foster a sense of safety and nurturing and creates a space where I feel at ease.

9) Integrate your passions into your practice

I have always integrated current interests and passions into my private practice. If there's a film that I really like, I'll use that with clients. More recently I've become a tech geek, so I've integrated technology into my private practice by launching an online therapy division, moving to electronic records, and building a social media following.

10) Take good care of you

Personal self care has always been high on my priority list. I've known that if my own needs were going to get met it was my job to make it happen. Whether it's scheduling exercise, bringing healthy food to work, making time for social events, or attending my own therapy, I am fiercely committed to making sure I am taking care of me. I think those habits have allowed me to energetically continue investing in my clients, my practice, and my employees without feeling burned out.

What things have you accidentally done right in building your practice? Please share so we can learn from each other!

What You Need To Succeed As A Solopreneur Therapist

 Why are so many therapists bad at building a business? A key to building a successful private practice is developing discipline.

Guest post by Clinton Power, a Sydney-based Gestalt therapist and the owner of Clinton Power & Associates and founder of Australia Counselling Directory.

When I first dreamed of being a therapist, my vision was about helping people, making a difference and feeling good about contributing to the well-being of others.

After 10 years as a therapist, I’ve become acutely aware of the reality of running a business by myself. While I still enjoy the reward of doing all those good things I mentioned, I’m also realistic about what it takes to run a private practice. In fact, I’ve come to the conclusion that to be a successful therapist in private practice today, you need to be a solopreneur.

What is a soloprenuer therapist?

So what’s a soloprenuer therapist? Effectively it means you’re an entrepreneurial therapist that works solo. Being a solopreneur therapist means you can hold a big vision of what you want for your business and you’re always on the lookout for new opportunities.

You might have all your qualifications, a lovely office space in the right area where your ideal client is located, the furnishings to accompany it and perhaps an attractive website. But that’s no guarantee that you will attract clients to your practice.

In my mind, to be a successful therapist and soloprenuer, you need to have some of the following skills:

• Marketing skills to effectively communicate about your services
• Accounting skills to track your income and manage your finances
• Discipline to show up and complete your marketing activities
• The ability to create a vision for your business and implement the smaller steps needed
• Interpersonal skills to network with other therapists and allied professionals
• Willingness to learn about online marketing, social media and good website design
• Basic SEO knowledge to help your website and articles show up in the search engines
• Writing skills and basic copywriting skills so you can convert your readers into paying clients

Are you getting the idea?

If you’re feeling overwhelmed, that’s not my intention. I hope you have a sense of how versatile you need to be to be able to run a therapy business that brings you clients on an ongoing basis.

I’m not talking about a hobby therapy business where you see a handful of clients a week. I’m talking about what’s needed to create a thriving practice where you are the ‘go to’ person in your niche and you can make a very comfortable living from being a therapist.

The importance of discipline for the solopreneur therapist

In my coaching and consulting work with many healthcare professionals, I talk to a lot of therapists that are wanting to build their businesses, but are not sure what they’re doing wrong.

If there’s one theme that seems to capture what many therapists struggle with, I would say it’s discipline for the solopreneur.

Maybe it’s from my many years as a classical musician, where I had to be disciplined in my musical practice to maintain my performance standard, but I see discipline as an essential part of my business, but also the mindset needed for success. And I see discipline as a major stumbling block for many therapists.

It’s so essential for the soloprenuer therapist to have discipline, because if you don’t do the work, no one will do it for you.

Tips for developing discipline

Here’s a number of ways you can work on your discipline in your private practice:

• Create a publishing schedule for your blog and stick to it
• Give yourself learning goals to increase your knowledge of how to use social media effectively
• Study the basic principles of copywriting so you can write powerful copy for your services and events
• Learn how to manage money effectively using accounting software that makes your job easier
• Create a networking schedule to build relationships with other healthcare professionals and make yourself accountable
• Create a marketing plan that breaks down into weekly tasks that you follow through on
• Create 1, 3, and 5 year goals for your business, write them down and review your progress every 3-6 months
• Join a mastermind group or find an accountability partner and schedule regular meetings so you can support, encourage and challenge each other

This is just a start, but I hope I’m giving you some ideas here.

I believe if you choose just one of those ideas from the list above and commit to the application, it can only benefit your therapy business.

The practice of discipline is one that many people struggle with, however, I do believe it’s like a muscle that you can build and strengthen with practice over time.

I invite you to experiment with shifting your mindset from thinking of yourself as a business owner to a soloprenuer, and notice what happens in your business. Take this as a challenge to help take your business to the next level.

Clinton Power is a Sydney-based Gestalt therapist and the owner of Clinton Power & Associates- a private practice dedicated to helping singles and couples move out of relationship pain. He is also the founder of Australia Counselling Directory, a free directory for find counsellors and psychologists in Australia. Clinton is also a passionate coach and consultant for healthcare professionals. Find him on Twitter @sydneytherapist.

(c) Can Stock Photo

Private Practice Marketing Made Easy

Last week I spoke to group of local therapists on "Marketing Your Private Practice" and a record number of people attended the presentation. Why? Because therapists in private practice feel ill-equipped and uncomfortable with the business aspects of private practice. It's rare that a marketing course is included in a mental health graduate school curriculum, and few internships and practicums offer marketing mentorship. In my graduate program in social work, just the words "private practice" were treated as "bad words," as if making money while helping people was somehow morally wrong.

For some therapists  the word marketing brings up feelings of anxiety, even dread. "I am not comfortable with self-promoting," I've heard many therapists say.  "I'm not in this for the money so I hate to think that I have to market my services."

Over nearly 10 years in private practice I've learned that marketing isn't as difficult or scary as it sounds. Most therapists already have the relationship skills that make marketing effective. You're already good at building relationships and communicating. You just need to apply your skills differently.

 Build relationships of trust

You already know how to market, because marketing is simply building relationships of trust in a different way. Marketing requires reaching outside of your therapy office, and often beyond your comfort zone. Whatever strategy you use: talking to strangers, talking to friends and colleagues, meeting with physicians or schools, or finally getting a website, it's all about building relationships of trust.

Let 2 simple questions guide all of your marketing

• Who is your ideal client? Identifying your ideal client is  not just getting clear on the demographic and diagnoses that you like to work with, but also the characteristics, values, and traits that you look for in a client.
• What is your basic practice message? This is a simple message that focuses on one aspect of your work and emphasizes the benefits of your services in layman's terms.

Talk to everyone and anyone about what you do

In graduate school you learned how to communicate, build rapport, and put people at ease. Building relationships of trust isn't just limited to talking with your clients. Effective marketing is simply applying all of the skills you know to a broader group of people. Talk about who you want to work with what you do with strangers in the grocery store, neighbors, extended family members, or online communities, media contacts, or other professionals.

Remember you're promoting your passions, not yourself

Effective marketing isn't about pushing yourself on others, but about letting the things that you're passionate about shine through in every conversation, every blog post, every interview, an every page of your website.

It only takes three

According to private practice guru Lynn Grodski, it only takes a few "practice angels" to have a full practice-three people who will consistently refer your ideal clients to you. You probably already have three referral sources ready to refer to you. All you need to do is warm the connections you already have.

How do you feel about marketing your practice? What works and what doesn't? Share your comments below

photo credit: Hen3k Hen3k