4 Compensation Options

For Independent Contractors

Compensation Classification

When entering the consulting world from a permanent position, many questions arise. However, the most immediate question, and the first step in educating

yourself in consulting, is learning

“How will I be paid?”

This question can be stressful when considering a career as a contract consultant for Healthcare

IT.

There are four main methods of payment that occur between healthcare organizations and

consultants.

Method #1 Salary Consultants

Salary consultants work with a firm that keeps them on payroll. Working as a salary consultant means that you’ll have a regular paycheck, possible bonuses, and paid bench time when you find yourself in between contracts.

Typically, you’ll have benefits offered as well. Most people find bench time very appealing. However, it’s very important that you make sure that you have an understanding of what will be available should the firm you join be unable to find a project in a timely manner

Method #2 W-2 Hourly Consultants

In this case, you’re submitting a timesheet and receiving a regular paycheck. The consulting firm through which you’re working handles the taxes and liability. Benefits may be offered under this type of arrangement as well. Along with regular pay, you’ll most likely be on a similar schedule for travel reimbursements. It’s considered to be the easiest and simplest of options when contracting. You’ll most likely not be provided with any income while you’re in between engagements. As a result, you’ll typically earn a higher hourly rate while you’re on engagements than if you were being paid a salary.

Method #3 Corp-to-Corp

Under this arrangement, you bear the cost of maintaining a corporation. The consultant will be responsible for taxes and providing him or herself with necessary benefits. Since you’re operating as your own business, you’ll be responsible for funding yourself in between engagements.

Method #4 1099 Consultants

This classification is used if you do not have your own corporation in place and are operating as an independent contractor. Many Healthcare IT projects do not allow an individual to truly perform his or her tasks and bill clients in a way that’s in line with IRS guidelines for independent contractors. Therefore, this method is not used very often. Most consulting firms will not compensate consultants under this arrangement. Since the circumstances of most projects will not meet the IRS requirements for this type of arrangement, it’s really important that you look at all of the details should this type of arrangement be offered.

Here at Healthcare IS, we offer our consultants the following methods: 1. Salary Consultants 2. W-2 Hourly Consultants 3. Corp-to-Corp If you’re considering a career in consulting, feel free to contact us for more details regarding any of these.

Info@HealthcareIS.com

Learn More At HealthcareIS.com

•  Ways to negotiate •  How to get the right contract •  Who to work with •  Tips for traveling consultants

Receive weekly tips from Healthcare IS on ways to improve your contracting career.