Let’s talk about hiring therapists!
When a private practice is struggling financially, I can–in many cases–trace the difficulties back to a bad hiring strategy. Hiring is simple in theory, but there is so much to consider before making any decisions. How much do you offer for starting pay? What team dynamic are you trying to create? How dedicated is your new hire? Should you hire them as a contractor or a traditional employee?
As you consider your hiring structure, keep in mind that some states don’t allow mental health providers to hire independent contractors. If your state does allow it, let’s take a minute to get educated about which kind of employee is best for your practice.
Contractors
Chances are you’ve either hired or considered hiring contract employees. They are often referred to as “1099 employees” because instead of a W-2 they are given a 1099 form at the end of the year. All contract employees will also need a W9 prior to receiving any payments.
Contract employees have a set rate or project price for the work they do. This means that it’s essential that you set up a clear contract that spells out your expectations. This will keep you out of trouble and is the only string connecting you to the contractor, so make it count.
A big benefit to a contract hire is that billing can be easier on you–since they will often handle their own billing. They will even provide their own materials, such as office supplies. It can also cost much less to hire them on, since you won’t have any added expenses for benefits like health insurance, etc.
Contractors often set their own hours which can be good…or not. Depending on the culture you are hoping to create in your practice, a contract employee could make it more difficult to feel unified.
Employee Providers
Although this is the traditional method of hiring, it is generally more complicated and costly. This hiring model requires the employer to provide unemployment insurance, the employer portion of FICA, and potentially disability and/or health insurance*. That being said, hiring an employee does give you more control of what they can or can’t do in the practice. As the boss, you can decide when and how people work. When you have more control, it can also mean there is more potential to be profitable. If you need guidance about creating more profit in your practice, consult your accounting professional (or us) to run the numbers for your practice.
My #1 piece of hiring advice? Don’t be afraid to be picky about who you hire! It’s an investment you are making and it requires appropriate thought and planning. Look for therapists who will fill their schedules! Find employees who are loyal to the practice and willing to work hard. Whether they are contractors or employees, consider a minimum hours/per month to motivate them to see more clients and work full-time. At the end of the day, your practice will benefit from employees who are dedicated and feel connected to the team.
Now that we’ve discussed hiring, it’s time to tackle compensation!
How do you pay your new hires? And how much?
Check out my article HERE where I unpack some of the common compensation issues I have seen in private practice.
*All employees require a W4 and I9 before receiving any payment. There are more state and federal laws for being an employer. In most cases you would have to provide disability and workman's compensation benefits. Also there are minimum wage requirements and other benefits that you may or may not have to provide depending on your state; health insurance for example. You will also be required to do the income tax withholding and pay the FICA.
This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney or advisor regarding your particular facts and circumstances.
GreenOak Accounting is an accounting firm that specializes in working with counselors and therapists in private practice. We provide monthly accounting & bookkeeping services, 1-time services and online courses. For more information on our specialized services for therapists please visit https://www.greenoakaccounting.com/our-specialized-services-for-therap