If you’re like a lot of my clients, you’re considering a remote position and you’ve come across a lot of posts (including the ones that I share) for a contractor, consultant, or 1099 dietitian position.
While the hourly pay rate for these positions is typically higher than a salaried role, there are several things you should know before you accept a contractor position.
In this article, we will outline everything dietitians need to know about 1099 contractor jobs. We’ll discuss the pros and cons of these positions and the steps you should take to ensure that you’re receiving fair pay.
But before we get started, we need to cover terminology and clarify the difference between a consultant, contractor and 1099 role.
If you’re looking for dietitian jobs, you have likely seen the terms “consultant”, “contractor” and “1099 role”.
In most circumstances, these terms are often referring to the same thing. A contracted dietitian typically works for a company under a contract instead of working directly as an employee.
What is a consultant?
However, the term consultant is a little bit more nuanced and often gets misused. Technically, a consultant is a professional with extensive experience and broad expertise within a specific industry. Most often consultants are problem-solvers who evaluate their clients’ needs and provide advice and guidance on a strategy. They often develop a plan and determine who will implement the action steps of the plan. A consultant typically isn’t doing the day-to-day work.
What is a contractor?
On the converse, a contractor typically implements the day-to-day work such as seeing clients, and patients or conducting a wellness fair. However, in the dietetics profession, the terms contractor and consultant are often used interchangeably. Many long-term care facilities hire “consultant dietitians”. These dietitians are certainly nutrition experts, but they’re also doing the hands-on day-to-day work. For all practical purposes, the title doesn’t matter because both are contract positions.
What is a “1099”?
This is where the term “1099 role” comes in. When you work as a contracted professional, you won’t receive a W-2 paycheck like a typical employee. Instead, you will be paid under 1099 status. Employers like this option because they don’t have to pay their portion of taxes, nor do they have to provide benefits. But we’ll cover more on that later.
The important thing to know here is that consultant, contractor, and 1099 are also used interchangeably in the nutrition and dietetics world.
Now that we have clarified title names, let’s dive into everything you should know before you accept a contractor position as a dietitian.
We alluded to this above, but this is HUGE. As a 1099 contractor, you are considered self-employed, and taxes are not withheld from your pay. You will be responsible for paying both the employer and employee portions of Social Security and Medicare taxes, as well as income tax.
Most experts recommend setting aside 20-30% of your income for self-employment taxes!
If you have never been paid in a 1099 position before, you will likely be SHOCKED when it comes to tax time. You’re going to feel “rich” until it comes to taxes.
It is really important to fully understand this and have a good system in place. Ideally, you’ll pay taxes quarterly, but that goes beyond the scope of today’s conversation.
Fellow dietitian, Holly Larson has a great article on this that you can check out here.
You must plan ahead to account for self-employment taxes.
I cannot emphasize this enough. You need to understand that you will absolutely still pay taxes on a 1099 role and you must plan for this in advance. You should plan on setting aside 30% of your pay to cover these expenses. Some people run into trouble because they have spent this money before tax time rolls around.
This is one reason why contractor roles pay more (or should pay more). As we’ll cover later, this isn’t always the case and this is problematic.
As always, I recommend consulting with a tax professional for specific advice on your scenario.
As a 1099 contract worker, you won’t be eligible for any company benefits including paid time off, health insurance, and a 401k match. Company benefits usually account for 25-35% of your total financial package (it’s a lot!).
Make sure you fully understand the cost of health insurance (if paying on your own) and the implications of not having a 401k retirement account.
How can you get health insurance as a dietitian contractor?
One of the questions that many dietitians have when they are contemplating a non-benefited position is how to get health insurance. I recommend checking out the healthcare exchange, where you can purchase marketplace health insurance. You can enter all of your information and get premium quotes with no obligation. This will help you understand the cost of unsubsidized healthcare and this cost can vary widely from $200-1000+/month.
Remember, as a traditional employee, your employer is usually subsidizing part of your healthcare premium. Purchasing your own health insurance will likely be more expensive than you realize and it’s worth investigating. However, this doesn’t have to be a deal breaker. Depending on your household income, you may also qualify for state-subsidized health insurance premiums.
Don’t forget to account for other benefits.
Apart from health insurance, you’ll also miss out on 401k options, contributions and matches as well as benefits such as vacation time and paid time off.
This may sound fine until you realize that you won’t have any income while you’re on vacation or when you aren’t able to work during holidays.
You will need to purchase your own liability insurance.
As a contractor or 1099 worker, you will not be covered under the company’s liability policy. Typically when you’re an employee at a hospital or a facility, they have liability insurance that covers employees should there ever be a legal or malpractice issue.
However, when you are self-employed, you will need your own liability insurance. This typically costs $250+/year depending on your scope of work.
You may also want to consider starting your own LLC to separate your personal finances and assets from your business work. This adds an extra layer of protection should there be a legal issue.
While we won’t cover liability and LLC creation in detail, these are things to consider and budget for.
