Biz Development, Taxes, Liability

Just starting out as a traveler? Traveling questions or experiences to share? Here's the place.
ahughes3011
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Joined: Wed Dec 28, 2016 9:09 am

Biz Development, Taxes, Liability

Unread post by ahughes3011 » Thu Dec 29, 2016 8:38 am

Hi James,

First thank you so much for giving your time, energy and info through this site. My wife and I are both PT's, are 1.5 years out from graduation and have several different settings under our belts: outpatient, SNF and home health. We moved into a fifth wheel trailer after we got married and are ready to hit the road. I will email you directly to ask about which staffing agencies you recommend.

We are aiming to contract directly with facilities after we have worked on the road at 1-2 sites to learn the industry. Are there any tax advantages to being an employee vs. a private contractor? From what I am seeing so far, it appears private contractors pay more in taxes (not splitting the self employment tax with the employer). Do you have a CPA or tax software that you would recommend using to handle your personal taxes/accounting and to maximize deductions?

Also, I started an LLC in Texas while in PT school for some fitness/health work I was doing on the side and intend to keep using this. Do you have a business designation to limit liability and hedge against personal assets? I was recently told by someone who lived through the same situation with his spouse/LLC to transition over to an S-Corp, treat ourselves as employees and issue a K-1 to reduce federal taxes. I do intend to purchase personal liability insurance through HPSO. If anyone has any personal experience or resources to refer, you can contact me at [email protected].

Thanks,
Adam

Hobohealth
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Re: Biz Development, Taxes, Liability

Unread post by Hobohealth » Mon Jan 02, 2017 10:07 am

Adam,

I want to give you a ton of information, but in the most efficient way possible. Let me give you a couple links and see if it answers your questions, then come back and ask more if you still have questions.

Personally, I have never incorporated myself, I have always worked as a temporary employee of the clinic (direct contract with the clinic - receiving a W-2). Ideally, you could arrange some tax-free reimbursements through the employer for per diem, housing, or vehicle.... but in my experience, most employers don't want that hassle (some will do it).

I use HPSO through APTA for my liability coverage, there is an addendum you can tack on to cover private contracting (I think it's about $200 extra per year).

I use traveltax.com for my taxes. They specialize in healthcare travelers.

Here's my bit on independent contracts:
http://hobohealth.com/wordpress/independent-contracts/

Hit me up if you have more questions! I'll shoot you my recruiters on email.

Actually, I have some questions for you. How was the process for you establishing an LLC? What was the cost? Is that a pretty easy or cumbersome process? What do you perceive as the benefits?

James

ahughes3011
Posts: 3
Joined: Wed Dec 28, 2016 9:09 am

Re: Biz Development, Taxes, Liability

Unread post by ahughes3011 » Sun Jan 08, 2017 8:44 pm

James,

Thanks for the quick response and all the info.

I had a phone call with Joe Smith at http://www.traveltax.com for information about whether (from a tax perspective) I should use the LLC or employee status. I will summarize our discussion below.

Joe’s first question was regarding establishing our tax home and differentiating that from a permanent residence. Read more on his FAQ page on his site. My wife and I intended to leave Austin and go travel, using my parents’ home as a “tax home” for all income, but that is 8 hours away and we had not lived there nor earned an income there before traveling. He said this almost always is a risk factor for an audit from the IRS. He explains why you need to pay attention to this before you travel on that FAQ page so check it out.

How do you maintain a tax home, James? We are interested in whether we should establish a permanent residence here or move to my parents home, take an assignment there before traveling (or Joe even said to do so within the year so it wouldn't have to be our first stop). We are thinking about buying a piece of land and living in our RV on it during the remainder of our time in Austin. Then that will serve as our permanent residence. Otherwise, we would have to pay fair market rent to friends/family to satisfy the requirement of maintaining a residence at your tax home which qualifies one as a "traveler."

Regarding the LLC, there are two considerations: legal/liability and taxes. I used a friend's law firm who charged me $150 to file the paper work. I noticed that’s the same cost on Legal Zoom. It is most definitely worth that amount for the automated service. Other costs were $300 with the Secretary of State and a few taxes put total costs at about $500. The most difficult thing about the process I found was understanding the Company Agreement (the constitution, if you will, for how your company is to be run). The firm drew this document up for me. You would want to be sure you have this as an LLC. The perceived value I received at the time was personal liability assurance that my personal assets were differentiated from business items if in the case of legal problems. Regarding taxes, the LLC also has nearly the same flexibility that a sole proprietorship with some more advantages that something more like a corporation may have. Here is a good article on that topic: http://www.bizfilings.com/toolkit/news/ ... -both.aspx

Regarding the tax scenario, I asked Joe if it would make more sense to have a contractor or employee relationship with the company we work with. He explained that the tax benefits as an employee for per diem, etc. were all a better and to sign on as an employee. We will use the LLC while in Austin and contracting near our home where we have lived for more than a year, which would disqualify us to pick up any traveling gigs in this area; however, we will be employees on the road.


Adam

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Re: Biz Development, Taxes, Liability

Unread post by Hobohealth » Mon Jan 09, 2017 6:09 pm

Wow, great info, Adam. I hope other people can find this post when looking for info.

My personal experience with tax home has evolved over the years. I think I started with paying my parents rent for a couple years, I even got a Florida driver's license.

After several years of traveling, and at the bottom of the housing crash, I bought a condo in my wife's home state of Maine to treat as our tax home. We transfered all of our stuff there (car registration, driver's license, voter registration, etc) - it was a poor decision. As permanent residents of Maine, we paid a 4% income tax to the state of all the money we made out of state that year (about $5k in taxes we weren't expecting). So if you decide to buy land and put a camper/yurt/whatever on it, definitely make sure that state's income tax laws are kind.

Also, that same year, Joseph told us we had been returning to Colorado so many years that Colorado had to be our tax home. Basically, since we returned to the same jobs every winter, the IRS would consider that our tax home. Joseph's comparison was a professional sports player who may play for Boston, but live in Chicago the rest of the year. S/He works in a bunch of different cities, considers Chicago his permanent home (Maine in our case), but makes the majority of his money in Boston each year, so Boston becomes the tax home (Aspen in our situation) - clear as mud?

So, Aspen has been our tax home for several years now and we have moved all of our info to here (banks, car reg, voter reg, etc). Hope this helps!

James

ahughes3011
Posts: 3
Joined: Wed Dec 28, 2016 9:09 am

Re: Biz Development, Taxes, Liability

Unread post by ahughes3011 » Wed Jan 25, 2017 11:28 pm

Hey James,

Sorry I got caught up in a busy spell with work and travel. That makes perfect sense and was something I had not thought of yet. Thanks for the detail and insight. I'll be sure to update everyone as this plan develops.

With thanks,
Adam

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