Joe Sanok 00:00:00 You’re someone with a vision for your practice, for your side hustle, and for your personal journey. But when it comes to establishing your path and how to get to where you want to be with your practice, things get a little messy. You’re also someone who’d prefer to go in person instead of to groups and listening to everyone else’s story. To me, it sounds like you could benefit from one on one consulting with our experienced practice of the practice consultants from 595 a month and up. You can work with a consultant that will give you more direction and practical, tried and tested tips matched to you and your goals. For more information, visit practice of the practice. Com forward slash apply. Again, that’s practice of the practice. Com forward slash apply. This is the practice of the practice podcast with Joe Sarna. Session number 109. Welcome to the practice of the Practice podcast. We are going to be doing a series between now and the beginning of November, where we are going to be playing all of our level Up week trainings that we did in September of 2024. Joe Sanok 00:01:21 And we’re going to be talking about from empty to overflowing, talking about your branding, talking about multi locations shifting from 1099 to W2, all sorts of different things during this series. And if you want help from one of our consultants for every single phase of practice, or if you’re just not sure where you fit in our memberships versus our consulting, I would love for you to talk with me over at practice of the practice. Com forward slash apply. We can schedule a 30 minute call together and dig into all those different areas that you want to get started again. That’s practice of the practice. Com forward slash apply. Now let’s get started with the level up week series. Welcome everybody. Hope you are doing awesome today. we are doing Level Up week, which we had eight sessions on Monday and Tuesday. Then we had our ninth this morning. And this is number ten of 16. We are past the halfway point. so excited to hang out with you today. today we’re talking about smooth shifts transitioning from 1099 to W2. Joe Sanok 00:02:23 And in case I haven’t met you, I’m Joe Sarna. I started practice of the practice back in 2012. really? Because I was reading books and learning things about private practice and just wanted a place to share those. and then in 2013, started the Practice Practice podcast. At the time, it was the first. Well, it still is the first podcast all about private practice business. we get anywhere from 60,000 to 100,000 listens a month. just past episode, a thousand back in June. And, let’s see, we’re headed towards, episode 1100 pretty soon doing it 5 to 6 days a week. Now, I’m also a dad. I get to hang out with two awesome daughters that are 13 and ten and have primary custody of them, and so we have tons of fun together. I’m excited to have Andrew with us. Andrew is one of our consultants here at practice with the Practice, but he’s also a licensed clinical mental health counselor located near Asheville, North Carolina. In 2019, he started the private practice journey in founding Mindful Counseling plc. Joe Sanok 00:03:19 And soon after, in 2022, he hired his first additional therapist. Heading into his second anniversary as a group practice, he transitioned a once 1099 contractor over to W2 employees. Along the way, Andrew continues to learn about different software and systems that simplify and streamline the process of running a business, delivering mental health services, and to better support his growing team members, he invested in trainings centered on clinical supervision, human resources and in 2020 for coaching. Andrew, welcome. So glad that you are here today. Andrew Burdette 00:03:51 Cool. Thanks for having me. I know there’s just it seems like every year there’s more letters behind my name, and I just get your point. Joe Sanok 00:03:59 Absolutely. Well, I mean, you’ve earned it. And I mean, you went through that whole, like, air training and testing and all that. So I think that, you know, I’m so glad you’re interested in that stuff because, boy, I’m not. Andrew Burdette 00:04:12 It’s it’s admittedly really dry. I had to kind of set my soul aside for passing the exam. Andrew Burdette 00:04:17 So last year I decided since there was this gap in, in group practice based around management and thinking about how to manage and in this book specifically on that, but just trying to trying to be a resource to kind of sit in between like an HR professional or like employment attorney, and then something that’s kind of more navigable and palatable to a therapist about kind of steering them in the right direction for the right professionals. And so, I joined the society of HR management, and there’s a it’s like a HRA. There’s a specific health care one for HR as well, that comes with included and then sat for the certified professional exam in the spring and got that done. And there we are. So right off here. Transition my team over to W-2s. Joe Sanok 00:04:59 Yeah. And you’re also a podcast host. Andrew Burdette 00:05:01 Yes. This is true. So if anybody on this call wants to be a guest on the grow Group practice podcast, please get in touch with me and be happy to have you on and talk about whatever you’re passionate about, whether it’s strictly clinical or how to run a group or marketing or anything else that kind of relates to group practice. Joe Sanok 00:05:15 Yeah, it’s been fun to watch you find your feet on that podcast to, like, really like have your confidence around it. And it’s like you’ve grown so much in a short period of time. It’s been awesome to watch. Andrew Burdette 00:05:24 No thank you. And it’s it’s it feels okay now that I’m doing it. But yeah, started the year I was like, I don’t know. Joe Sanok 00:05:30 I don’t know if I should do this. Yeah. Andrew Burdette 00:05:32 my former career and reasons why I get interested in technology and stuff was actually running like tech background stuff. So Hollywood film and television post-production audio. So, you know, the guy on the mixing board, not the guy in front of the microphone. And so it’s been interesting kind of transitioning over to that, too. Yeah. Joe Sanok 00:05:48 It’s funny, I wanted to be the guy in front of the microphone, when I was in bands, but then I always ended up being at the mixing board, helping out because I had enough of that tech that I could help with that when there wasn’t, like, a mixing board guy, too, so. Joe Sanok 00:06:00 Well, cool. I’m gonna, share your slides. Andrew is going to be presenting for 20 minutes. Half an hour. We’re going to then have, a little conversation, just about kind of that transition. Anything group practice. feel free to ask those questions. So even though our topic is 1099 to W-2, as we dig into this, if you have questions about other aspects of group practice, other aspects of HR, you know, Andrew keeps a consulting client load and is really active in our group practice, launch and group practice programs. So there’s not really a question, that he can’t answer. And if he can’t, I’ll try to help. And if we can’t, we’ll say we can’t. So, so I’m going to, share, your slides here, and you just let me know when you want me to click it along. Andrew Burdette 00:06:42 Oh. Sounds good. So I’m not a super big slide guy. This was just seemed interesting or seemed helpful to do because HR is kind of dry. There’s steps and things and just to kind of help keep things on track. Andrew Burdette 00:06:52 So, if someone that did the 1099 shift. kind of it was meant to be in Q2, and I kind of ended up being into Q2 before we really did it. But, did the ten on the new W2 switch this year, and it was relatively smooth, I gotta say, like there were some definite learning things. you can go ahead and pop up the next slide. So if you are somebody that, hasn’t hired anybody yet and is planning to do a group practice and thinking about what’s next, start W2, it’s so much easier because it’s going to save you double the work. you’re going to have two different if you are ten and nine and are transitioning to W2, you basically end up with two sets of paperwork. You have your contractor oriented paperwork, and then you also have your, W2 paperwork that goes along with it. the conversation, probably the probably the most unfun part about the transition is kind of having to to lay out to your future employees from contractors what their compensation is going to be and, and explaining to them kind of from a number standpoint about how and why things look different. Andrew Burdette 00:07:55 What they’re gaining is W2 employees versus, maybe perceptually losing from like a compensation standpoint of the 1099. you’ll kind of relearn your accounting and payroll system because there’s a couple different things like taxes and unemployment insurance and some things that, modern systems are going to take care of for you, which is really great. And then there is an adjustment period for kind of relearning, like how to conceptualize your expense profile and portfolio as it relates to your staff. Because like I said, the numbers do change. everyone I know, they kind of did this transition locally last year, it seemed like took about six months to really feel like they settled in. And having done this about six months ago, I feel like I’m finally settled into where I have a sense on what to expect, how much is going to come out from my payroll side of tax and other things like that with my staff. So, we can go ahead and jump to the next slide. so really the key difference is between the two, at a practical level, our contractors are independent and they should remain as. Andrew Burdette 00:08:56 You should treat them as autonomously as you can. taxes and expenses are the responsibility of the contractor. And as an as the owner of the business, you really have limited direction over how the work’s performed. And so what that really means is you can say, hey, I’m running a kitchen, we’re a bakery and we bake things, so I need chocolate cakes. And you can kind of say, I need a German chocolate cake. But the process of how to get there is really left up to the contractor. Whereas under a W2 model you can really spell out the process and the recipe and the tools that they’re going to use and how they’re going to really perform the work. but the W2 employee side of things, you as the owner, take over kind of covering half of Social Security, Medicare, which is 7.65%. and then unemployment insurance, which is basically around 1% to start off with. And then if you have somebody that does filing an unemployment claim, then it goes out. But right off the bat you can plan on 1% there. Andrew Burdette 00:09:52 expenses are going to be paid by the practice. They’ll go in a little more detail later on. but really, from a business owner standpoint and reasons why I like W-2, I think is a more sound model is you really get to have control over a lot of different aspects of how your business runs and create the culture that you want. so we can skip over to the next slide. this is just a short breakdown of like who’s responsible for what expenses. So on the 1099 side, like I said, they’re independent. So there’s no benefits, no unemployment coverage and malpractice insurance. covered by the practice. The marketing costs are going to be on the burden of the contractor. Other expenses like rents and other things, all of that’s going to be on the contractor, and they’re going to bear the burden for the W-2, Social Security, Medicare. you all split that. the unemployment tax, people in my practice and generally understood, for therapy practices is the malpractice insurance is going to be covered by the the business they’re working in. Andrew Burdette 00:10:47 So your business worker’s Workers comp all the advertising and marketing, which also allows you to make decisions about what kind of marketing you’re going to do, like whether or not you’re going to have Psychology Today profiles, business cards, other things like that. office rent and again, office rent, you can kind of go either way. But obviously like his employees, they’re not going to necessarily be paying rent to rent space and work for you at the same time. And then anything else that kind of goes into running your business. so other software packages, phone systems, other things like that, those are going to be something the business takes over. so let’s see what’s next. so advantages are you get a couple different options to pick pay structure. I’m in a base plus commission model, which is a little more flexible, I guess, in some ways. I have different insurance rates, and so everybody gets a fixed percentage of that insurance rate. everybody right out the gate gets a, like a base rate that’s paid. Andrew Burdette 00:11:45 so there’s an admin rate that people get and they get paid at for doing notes, for showing up to staff meetings, for doing company required trainings for other things like that. that’s also set up to be my PTO rate. and then there’s the clinical rate, which is for clinical sessions. And so that commission, the way the breakdown works is in several practices locally here. Do a similar thing. If a clinician completes their notes within the 48 hour window, the insurance is really require then they get the balance of their commission. So if it’s like say a 5050 split, it’s a $100 commission or $100 total. they’ll get say, $20 in the front end. And then when the insurance pays and their notes are done, they get the other $30 of their commission once that comes in. So that’s one option. There’s a lot of people that do flat rates around here. And then if you are planning to have people do above 20 hours a week for billable hours, then it’s really worth considering, like salary and, and looking at that to just kind of guarantee a baseline for everybody. Andrew Burdette 00:12:42 And depending on how many sessions they work and what your kind of overhead cost profile looks like, Sally could actually be the most advantageous to you as a business owner, depending on how the rest of your business structure works. some other advantages for W-2, employee handbooks. North Carolina doesn’t require one until you have 15 employees, but, it’s a good idea to have practice policies laid out about how things should be done, and set culture and set expectations around things. it was an interesting learning curve, realizing that when you give people the opportunity to clock hours, they will clock everything. So it’s like, hey, I thought about this session, you know, and clock time like that. And, so it’s been interesting kind of discussing with my colleagues that are also fellow group owners here about setting practice policies around pay and kind of setting boundaries around what’s paid for and what’s not. If you just happen upon a therapist in a grocery store and you’re kind of talking, you know, casually, that’s not really the same as attending a networking event, for example. Andrew Burdette 00:13:41 oversight of how the work is performed in detail. And so that can include things like we are revamping our kind of referral to free consultation intake process at this point, and kind of centralizing everything. We have a CRM that we’re employing and finally have automations and calendar stuff scheduled and set up so that somebody can click on our website, pick the clinician they want to start with, and then also book through a free consult for 15 minutes and also centralize everything into to kind of go through our admin person and app and account. So as a W-2 and W-2 based practice, you have the ability to kind of specify that, it’s going to be a little bit longer for us to kind of finish transitioning over because several of my clinicians started as contractors. And so we’re really independent. And so trying to kind of get them corralled into like the new workflow is, is where we’re headed with that. But you get direction over how the work is performed and set standards and have some more control over that. another thing is, as W-2s, because you, the business owner, are able to kind of dictate and set up a lot of the things and manage things like the marketing and other business related things. Andrew Burdette 00:14:52 Your staff can really just show up and be therapists and go home. There isn’t really a whole lot else they have to do. Whereas if you’re in a 1099 model and you’re really doing the proper 1099 model, what you’re going to get is having to coach your contractors on some business acumen around how to market themselves and network and other things, all of which is great. But there’s a different burden on the contractor to do that versus as an employee. And so for the the clinicians out there, the therapists that are seeking work that really don’t want to do any of the business end of things, the W-2 model is more attractive. employees end up having a reduced expense profile because you’re covering a lot of the things, like I said, advertising, rents, marketing, malpractice insurance, future benefits and other things like that. That becomes something that the business takes over as an expense. And so, even if the take home like on paper for check to check. Looks a little lower. They are benefiting in other ways and oftentimes a lot of those to the business owner because it’s compiled as a group, you kind of get a bulk discount. Andrew Burdette 00:15:54 So the malpractice insurance, for example, would be about half of what it’s going to be with more coverage per clinician that if they were independent with their own PLC set up and then doing their own on their own, the other things that definitely puts you in an advantage as an employer, with W-2 versus contractor is you can provide things like paid time off, short term and long term disability vision, dental. There’s several options to consider for health insurance or other health options. but she can provide benefits for your employees. And if you are an independent person and have ever really looked at or applied for things like short term and long term disability, they’re really difficult to get if you’re just a single person. And so whereas it’s actually relatively easy, assuming you have a big enough practice and a lot of times the minimum numbers, three or more employees to have a company plan everybody can participate in and provide things like, again, short term and long term disability, I think vision and dental locally. I think all of that was quoted around oh, and life insurance like $25,000. Andrew Burdette 00:16:55 I think the quote from my insurance guy was going to be about 150 a month per person. which when you kind of do the math on numbers and let’s say you have we’ll do a little math in here just talking about benefits and cost advantages and things. if you’re talking about a clinician that’s working 20 sessions a week at $100 a session and works 48 weeks a year, that’s 900 960 sessions for $96,000. And so if you’re talking about $3,600 in benefits for premiums and things like that, that’s a relatively small, you know, drop in the bucket to things. And it and depending on how you choose to kind of cover that, you may or may not cover all of the premiums to the person. So you may split it houses and then you’re only out maybe 1800 or so for the year. But there’s there’s lots of good ways to, to structure that to, to incentivize people sticking with your practice. And the last thing is you really get, the ability to kind of dictate company culture. this year I’ve hired three people, potentially a fourth one, if we can kind of sync up the numbers. Andrew Burdette 00:17:56 So I have if I hire the fourth person, I will have doubled my team twice over this year because I came in with two people at the start of 2024. so part of what’s been interesting, culture wise, is to try to figure out a way to get everybody to kind of meet on a regular basis. So one, I feel like I’m in touch with my team, and two, they feel like they work in a team of other people and are not isolated. So, from an employer standpoint, you can do a lot more to set culture and dynamics and things like that. I guess the bigger other last thing is, labor laws and classifications got stricter this year back in March. And the other thing that kind of came out around the same time, but unrelated was the end of non-compete, but, effectively, if you’re if you have a therapist practice, it’s harder to justify contractors now because the IRS, if they come to look at you, is going to be a little more strict on evaluating the classification of this individual that’s working with you or for you. Andrew Burdette 00:18:57 And so the other really nice thing about if you start with W2 or switch over, is you’re not going to run the risk of misclassifying labor as contractors versus employees. And that can get you in hot water with fines with the IRS. if you have somebody that say worked for you for three years as a contractor and the IRS determines they were really an employee the whole time, you’re also going to have three years worth of back taxes to pay on their behalf. So it can be a really costly mistake if you don’t set things up properly. So I think that’s it for that slide. Let’s see what the next one is. you know, honestly, in talking with an HR person back in December, who kind of really posed the question, like, why not employees? Like for me, the biggest thing that came into mind was I’m going to have to change my management style and be more of a boss than I really want to be. And she’s like, you actually don’t like you can still be the same kind of manager that you would otherwise choose to be, and allow people to have the same level of autonomy over their schedules and client fit, and working with who they want to work with and are best working with. Andrew Burdette 00:19:57 so a lot of that doesn’t really have to change when you move people over to employees. And with modern HR, support systems, you can do fractional HR systems, a lot of payroll services like QuickBooks and was ADP and gusto. They have HR things built in to mainly around payroll and benefits management and other things like that. So there isn’t really much of a of a hassle or disadvantages going with the W-2 model. but once it’s up and running, it is a little different setting up, but you’re still going to have to do the same kind of paperwork and other things you are to set up contractors just a little more to set up payroll with, employees. And so once that’s done, the actual ongoing operations of things runs relatively the same. paperwork wise, this is one of the things that threw me a little bit early. coming from a contractor background. So with a 1099 contractor, you have the contract. So that’s the thing that we do. it’s how it basically is kind of all in one defines what your job role is, how things go, what’s going to be in there and what their job expectations are and what the outcomes are and stipulations around, terminating with and without cause. Andrew Burdette 00:21:08 But it’s basically kind of your employee handbook, your job offer letter and job description squished into one document. along with that, it’s going to be important to have a business associate agreement so that if there’s some data leak that you’re acknowledged and notified about it, and because there’s some shared office technology resources in my practice, we also had a technology use policy. but as far as taxes go, you have the W9, which is for the 1099 set of stuff. For the employee side, you have a job offer letter, which was like, wait, there’s no contract. That’s that’s the number one question I get. but yeah, check with, my HR consultant. And my attorney was like, is this is this for real? It’s just a job offer letter and description. And they’re like, yeah, that’s it. And in doing that, you want to be really careful about not implying it’s a guarantee of employment. I’m going to write to work state. And so you do want to have a professional kind of really look over your job offer letter and description and make sure there’s not the impression that, you’re guaranteeing some level of employment for some length of time. Andrew Burdette 00:22:06 Because if something does go on and you all need to end the relationship, having an out’s important. again, the employee handbook is kind of where you lay out all your company policies and how things work and who to complain to if they have issues with you. you’re going to have an I-9 verification, which is passport or other forms of proof that you’re a US citizen or somebody that’s allowed to work in the country, and then the W-4 and state tax forms for W-2. So that’s really a little bit more paperwork on the front end. But once, like I said, once it’s done, it’s up and running and you don’t talked about this on an ongoing basis. Joe Sanok 00:22:45 I am so excited about alma. When I had my private practice, I struggled building my caseload, attracting the right clients, managing the business side. And honestly, one of the reasons I didn’t take insurance was it was so difficult to navigate. So many of my consulting clients deal with these problems as well, and almost supports clinicians in building rewarding private practices with simplified insurance credentialing in under 45 days, enhanced reimbursement rates, and guaranteed two week payback, plus a free profile in their searchable filter directory, making it easy for clients who are the right fit for your practice to find you. Joe Sanok 00:23:25 Learn more about how alma could support your private practice at. Hello, alma. Com forward slash Jo. That’s. Hello, alma dot com slash Joe to learn more. Andrew Burdette 00:23:40 benefits to individuals. so the contractor, you do end up with a higher, typically about a 10 to 15% difference in take home in terms of if you’re doing like some kind of fee split or fee for service arrangement, and the contractor retains the ability to deduct all of their business expenses because they’re going to be making all of those business expenses themselves. as an employee, you’re going to have, federal and state tax withholding, from every paycheck, which is good. I know a lot of people can get in trouble by not paying or paying attention to quarterly taxes. So it kind of helps save people and spare them from from that come tax time. half the Social Security and Medicare withholding is paid. malpractice is going to be covered by the business. There’s going to be a worker’s comp policy, unemployment. and then whatever benefits you decide to actually share with your clinicians and things like that. Andrew Burdette 00:24:28 So the at the end of the day, the individual actually benefits pretty strong to be an employee, even if like numerically, it seems like they’re getting paid less talking money. So this is really this is really, I think, where people get stuck in my consulting clients that got 1 or 2 that are kind of talking through how to get this going or how to switch, or how the conversation around money, pay is going to look lower to an employee versus a contractor, again, because there’s about 10% of expenses that are going to be covered by the employer. If you have employees that would otherwise be the burden of the, contractor to pay, or they just lose out altogether with things like unemployment insurance. there’s am I going to have the same flexibility and, control over my schedule and who I get to work with and those kind of things. And that’s really up to you and that’s your management style. And then we’ll lose the ability to work a part time job or not. And again, that’s also kind of how you structure your, your policies and things. Andrew Burdette 00:25:27 I know for my business, my stipulation is I don’t want you working in the same servicing the same population. So if you’re going to be an outpatient therapist, I don’t really want you working at another group practice to to do outpatient therapy over there unless there’s something really specific they do that we don’t. So an example would be if you want to go do ketamine assisted psychotherapy, you could go work at my friend Kim’s practice because she just got accredited with an IOP and PHP for all of that, which is pretty amazing. And probably you need to like probably the whole country. You’re pretty close to it. So again, different specialization. Or if you want to work at eating disorders, we don’t do eating disorders in my practice. But if that’s an issue really interested in and you want to go work at group practice that does that and maybe do that part time and do some other clients with me, great. I’m perfectly fine with that. so I think you can you can kind of help people balance that out if you want. Andrew Burdette 00:26:24 and then I think, I think the big one on here to talk a little bit more in detail about is how to explain the pay differences and when I was transitioning over 1099 to W2. my first hire this year started as a contractor because with insurance blitz, with the health debacle and a few other things like at about six things break in February, so I didn’t quite have my W2 transition to start with him. So he started contractor for about ten months and we switched him over. But ahead of time we had already had the conversation about, even if I do start you at 1099, because I have things in place for that and you want to get started, here’s where we’re headed so that you can kind of see numbers wise, like here’s things are going to kind of have to cover for about a month or so. And then once that switch is over, I’m going to take over the responsibility of that. And numerically, here’s how things work out on paper. my other full time person that switched over, it was a little bit different, scenario. Andrew Burdette 00:27:21 a lot of people seem like they started doing groups back in 2020, 2021. This was ahead of profit. First rate therapist coming out. This is when things were primarily telehealth. I think a lot of us kind of ended up overpaying our contractors for what was really solvent for the business. And so part of the conversation with my other contractor switching over to W-2, was trying to find something to where, as a business owner, she’s too valuable to let go of. And I’m still going to maybe overpay a little bit, but I’m not going to like, lose money. I’m not going to be negative and trying to come up with a number to where we’re closer to what her percentage was as a contractor and still being able to kind of, make it work for the business going forward. And so we were able to come up with a number that worked out. it’s a little higher than I would percentage wise, pay anybody coming in new. But we, we got things worked out. And like I said, it still ends up being profitable at the end of the day. Andrew Burdette 00:28:17 just with a little less margin. And so the hardest part about this is just planning for that conversation around money and being able to kind of break down and do the side by side comparison of like as a contractor. Here’s what you’re currently getting. here’s kind of where you’re going to end up, like with expenses and other things based on what I know as a business owner. And then if you do this, switch over to W2. Here’s the things that I’m going to take over so that these are no longer expenses for you. So yes, there might be like a perceived difference in take home, but they end up for the end of the day should be very comparable. But that’ll be an area you definitely have to explain. But that’s, that’s kind of my spiel on this. And be happy to have conversations around questions or other things. If people have things they’d like to jump in and ask. Joe Sanok 00:29:01 so awesome. Thank you so much, for walking through that. so what questions come up for y’all? so drop those in the chat, or you can, raise your hand. Joe Sanok 00:29:12 if you click on react, you can react. You can be like, you know, give, some rocket ships, you know, that Andrew’s making us take off into a whole new realm. or you can, under that, you can raise your hand. so if you raise your hand, that lets us know that, you’re going to unmute. You got a question for Andrew. Maybe you want to share your situation and get some feedback. Just as a reminder, we are not accountants or attorneys. We are speaking from our own experiences with all of this and saying, here’s what we’ve learned and here’s kind of best practices. So put those questions in the chat. or feel free to virtually raise your hand. Andrew, when you think about, how your staff took the money conversation, you said that’s, you know, often one of the hardest conversations. What we’re kind of typical questions that they asked you. And how did you respond to them? Like, I’m just thinking, you know, if I’m making, you know, whatever percent or, you know, flat fee, you know, now I’m going to be seeing less money. Joe Sanok 00:30:08 Like, how did you help people understand kind of the tax side and all those sides of it? Andrew Burdette 00:30:14 I mean, I made a spreadsheet and literally did here’s kind of, here’s, here’s numbers. So realistic numbers, if you’re getting, say, a 6040 split, which is a pretty typical contractor split. so here’s your 1215, 20 sessions a week break down and kind of broke out on the side of how many hours of admin you might be getting, which in my practice is basically mine. As a contractor, unless you showed up to a staff meeting, there was a not paid for that time. But outside of that, there really wasn’t any open time there. And so I broke down this and I kind of listed below, like things that you’re responsible for and kind of highlighted that and like, you know, read the show. This is other things you’re going to have to pay for and show the tax side of things as well, to just say, after you’ve paid your 15.5% tax, you’re actually closer to like, say, a 52 to 55% split, kind of thing. Andrew Burdette 00:31:06 And and then kind of right below that had the same breakdown, so same column, same everything, and then had a list of like in green. Here’s things I’m taking over from your expense profile as well as like what your take home is going to be. one of the things I do, and this is consistent with a lot of my local peers, is I pay everybody $12 or 12 minutes a note or 12 minutes session to do notes. So if you do five sessions, you get an automatic rehab and to just handle those kind of things. we do free consoles for about ten 15 minutes of screen people. So that’s a now paid thing. So breaking down that kind of additional admin time, which kind of showed some of that offset and where things worked out. Joe Sanok 00:31:46 next question is how do you balance W-2 pay? I’ve heard you can give a split commission flat fee. Is this only with clients that are seen versus hourly salary, different forms of hourly? how do you sort through all the different ways that you could do W-2 pay? Andrew Burdette 00:32:05 that definitely that I’m laughing because, like, that’s still an ongoing question. Andrew Burdette 00:32:09 One of my friends last year, when she switched over was was a smaller practice like mine, and she went through about three different versions of things. So she tried salary out for a while because people were complaining about XYZ. But then people drop a caseload off and it wasn’t sustainable for her to pay salary. So then she moved everybody back to, I think, a commission based thing. But then people weren’t happy with that because they weren’t able to. They didn’t want to do their own math, so they didn’t want to say if it’s 120 on a session, what’s my percentage of what’s 53% of 120? They just didn’t want to do the math. And so she finally just fought flat rate at everybody. you can do splits. The main thing with W-2s is the total number of hours. Work has to be paid at at least the minimum wage for your state. And so if you’re talking clinical rates and things like that, if you’re average session rate around here is going to be in most group practices, is going to be between about 60 and $75 an hour to the the employee, are reimbursement rates usually around 120 or higher. Andrew Burdette 00:33:10 And so from that end of things, if they’re working 20, excuse me, 20 hours a week, the likelihood that they’re going to drop below, $7.25 or whatever, the ridiculously like awful minimum wage is in North Carolina, whatever the federal minimum wage is, is in North Carolina. So it’s $60 an hour. You’d have to work a whole lot of hours to drop below seven, 25 or whatever it is. And so however you end up choosing to structure things, want it to be something you’re comfortable with and understanding where the math goes to. It should be something that kind of everybody’s on board with and makes sense. I don’t know that there’s a right or wrong answer. again, I’ve got colleagues. There’s this really unique kind of collaboration and collaborative group of group owners where I live. And so we talk through things like pay structures, and we’re trying to be we’re trying to be fair to everybody is really kind of it. And so the pay discussions come up and again, there’s a mix of salary, there’s a mix of flat rate and a mix of commissions. Andrew Burdette 00:34:05 So I think it more comes down to how you want to handle your business and your payroll. Joe Sanok 00:34:10 yeah. let me share, something that I put together for my consulting clients. that might be helpful. So, I did some code that, we then turned into the staff wage calculator. so this is a good way to kind of run some of these numbers. So you just start on the left side and say, how many full time staff do you have? So say you have three full time staff, average reimbursement rates 125 per session. They do 25 sessions a week on average for 48 weeks a year. So you can toggle any of those numbers. So that’s about $150,000 gross per clinician. then we look at the admin say you’re paying 25 an hour. they’re working say three hours a week. so, you know, if we have three, we’re probably going to be a lot higher than that. So maybe we do like we’re like ten hours a week, for someone, 48 weeks a year. Joe Sanok 00:34:55 And then if we look at supervision, maybe you have, like, a clinical director that’s just kind of checking in on people when needed. that could be you. That could be somebody else. but just kind of breaking apart that time so that if eventually you want to pull yourself out of it, then it’s a little bit easier. and then your owner time. So we want to think about if you were to hire a CEO to run the practice that wasn’t a clinician. You’re not getting a clinician rate, you know, $100 an hour is quite a bit, you know, for a CEO type of person. So is that going to be five hours a week, ten hours a week. So maybe in this practice, we give it, you know, ten hours a week for 48 weeks here. So then we see our annual costs for some of those things. Then we can add our marketing budget insurance, rent it health. and it breaks it down per clinician. What’s going into it. So for example, if we have a $5,000 marketing budget, we have three full time staff, and maybe you’re one of those full time staff. Joe Sanok 00:35:44 then that’s how much it goes per clinician. miscellaneous. This is where you could add in taxes, other things that are expenses that we just didn’t include in here. There’s, you know, 50 million different things we could have put in here, but you can just put in, you know, what are your extra annual expenses. So then you can start to toggle it. If I paid them, say $50 per hour, you know, they would get about 60,000 a year. maybe you’re going to add some retirement into, or we can toggle this to say, what’s that percentage that breaks down to about 40% that they take home. And we can say up top where it pulls it all together okay. Your net profit per clinician then is 42 grand. your net profit across the board is 128 grand with your gross revenue. So before all these expenses is, you know, for 50. So then what you can start to do is say, well, if I want to do a salary mode, okay, so let’s say I tried to shoot for, you know, 55%. Joe Sanok 00:36:34 How does that change things? Then they can ends up giving them 82 five. And that breaks down to about $68.80 per hour. So you can start to toggle these things and play with it to say, okay, well what if until their part time or full time say I was paying them $50 per session, what does that look like? And then, you know, they’re at say, you know, 12 sessions a week and then when they’re at 15, maybe I do a salary or maybe when they’re at 25, I do a salary. So you can start to toggle a lot of those different things. So I think having things like this staff wage calculator helps you then run those numbers without having you have to run them over and over and over. Just kind of auto populates for you. Andrew Burdette 00:37:11 And again, once you kind of have an idea of what you want, the rest is just tweaks. And so before you’re having conversations with staff, it’s important to have, an idea about where you’re headed so that they have a clear idea of where they’re going if they stay, stick around. Andrew Burdette 00:37:26 Yeah. Joe Sanok 00:37:26 When you think about so like the first six months of that transition, like any transition is hard, especially if people thought they were making X number of dollars per session and then on their paycheck. It doesn’t seem to reflect that because they don’t realize the taxes thing or they had to be educated on that. How much of this work now is ongoing after you make that transition work? Andrew Burdette 00:37:47 Meaning like W-2 specifically. Joe Sanok 00:37:49 How much goes into like compared to when you had 1099, like running a practice with 1099 or running a practice with W-2s. Is it equal work? Is it less work? Is there areas that it’s more work? Andrew Burdette 00:37:58 It’s about the same. I’m also trying to keep in mind that because I’ve brought three people on this year, like there’s work that goes with onboarding people, that’s separate from the ongoing work to keep employees. But, my hire that started back in February, even though we started 1099, like he’s up and running, he’s really autonomous. I mean, we touch base, he’s got some He’s actually covering some people. Andrew Burdette 00:38:21 On maternity. Well, one of my other clinicians is on maternity leave. So like I said once, once it’s up and running, you don’t really notice any difference. Payroll works exactly the same as it did before. it maybe takes me a little bit longer because people are tracking hours. And so I kind of do the hour calculation and then I kind of subtract out, have they been already paid for their AB and rate and then subtract that out of commission. So maybe payroll takes me another five minutes per person. But there’s no noticeable difference at being more more busy as a W2. Joe Sanok 00:38:52 All right. we’ve got some links here Sarah’s putting in. Thank you. Andrew, looks like you answered one of those questions when it came in about independent contractors. Andrew, tell me a little bit about when when you and Asha running group practice launch. Like, what are some of the like, first questions that a lot of people have in, say, the first month of group practice launch? Andrew Burdette 00:39:12 Oh, I gotta think back to the spring. Andrew Burdette 00:39:15 you know, I think some of it just comes down to how do I structure things? A lot of this conversation here about, you know, what kind of pay structure, what do I need for my hiring? How about a job description? it’s important to kind of think through just in the same way you have, like, an ideal client of who you like to work with. You’re going to have an ideal clinician kind of avatar that fits your practice. And, I know one of the things I’m, I’m big on talking about kind of throughout things is you need to create an identity for your group. I think this is one of the things that way back when I was in next level practice and watching like, Allison when Allison videos. Yeah, I think I was like, thinking of her. And yeah, getting mixed up is like, not the same. But, just the idea of of having an identity for your group. So, you know, if you’re like the CBT Center of Asheville is one of them. Andrew Burdette 00:40:02 That’s a big, massive group practice, but not really CBT. But there’s an identity baked into the name means mindful counseling. That’s kind of where we all kind of meet up, even if we work with different things. But it simplifies, everything else you do, and it’s kind of foundational to kind of things. So not only do you need a practice name, but just kind of get started, but, picking something that kind of speaks to the ethos of your group and you’re kind of core values as a group and things like that. And that translates in and I think a lot of people are just so focused on hiring that next clinician that they can get in trouble because they find somebody that wants to come work for them, and maybe they work with kids and you only work with, you know, 55 year olds or something like that. Like you’re not really a great as a collective. You’re not really a great fit, right? Even if the person’s great. Joe Sanok 00:40:47 so awesome questions that I wonder about, is how do I fund the practice? Should I get a business loan? I work full time somewhere else and run my solo practice part time. Joe Sanok 00:40:57 Is it realistic to start a group and work full time? I’m single and unmarried. Andrew Burdette 00:41:03 I’m gonna say yes, but that’s my thought on things. yes. To, like, you can do it. it may. If anything, it may just impact the pace at which you do things I think would be a good way to do it. I mean, if you’re if you already have a part time solo practice, you could add a full time clinician and still work part time in your business. I would really discourage against any kind of business loan or anything like that, unless you’re like buying a building and renovating it or something like that and already had the way needs to pay it back. So you need that upfront setup cost, but you already have a way to pay it back. so I mean, that’s my $0.02. What do you think, Joe? Joe Sanok 00:41:37 Yeah, I’m with you. unless there’s a reason to go in debt to me, a business loan just kind of puts you behind the starting line. Joe Sanok 00:41:45 the way we tend to encourage people to structure their businesses is to have it cash flow immediately. So having contracts with W-2s, where it’s based on sessions, based on whether it’s a flat fee or percentage. I’m seeing with my consulting clients that flat fees are attracting people more. And then also, you know, if you’re raising rates, you don’t have to kind of change it. And people aren’t always running those numbers of, oh, why am I giving Andrew 40%? but instead I just know I always get, you know, $65 per session. so I think that, in general, going into debt for it, unless you have like, like Andrew said, you bought a building something that is going to go up in value. if you’re going to take on, you know, $10,000 to go buy furniture, it’s like, I’d rather see you kind of bootstrap that a little bit. I think there’s a little bit more chutzpah behind it that’s going to help you, you know, kind of learn the grit of it rather than if a year from now you decide this isn’t for you, and then you have this, you know, ten, 20, $50,000 loan to the bank. Joe Sanok 00:42:44 I never want your business to affect your family. Even, you know, you said you’re single and married. No kids, but it still affects your future in a way, if you have that debt. So, I would say, you know, with a small group practice, you could even sublease. And, you know, that’s how I first started. I subleased in office. I had four clinicians out of that office as I was subleasing before I jumped up to a four office suite. and so we just creatively rotated who has Mondays, Tuesdays, Wednesdays, Thursdays, who has the weekend. and then there was a point when we were bursting at the seams so much that it was. It was evident we had to upgrade to a four office suite. And that was a bit of a jump. But I had some savings. I knew, okay, I can pay the rent for the next six months if nothing comes in, but what’s the scalability if we go from a single office to a four office and we exploded? So I’m with you, Andrew. Andrew Burdette 00:43:32 One other strategy around that. So I’ve been doing like individual satellite offices. So my max my one office that’s full time and then found a space that can accommodate groups. And so took that over. And with my my hiring that’s ongoing. I’ve got somebody starting in about two weeks. I already have people lined up to fill it up. And so there’s a little bit of like just timing and making sure it’s the right thing. I didn’t want to lose the space, maybe out, you know, 500 bucks a month in rent for a month or two, but that’s about it. So I’m willing to float that to have the right space, because I know stuff’s coming in to kind of cover it. But you can always do 1 to 3 different, like single room things and add or subtract one as needed, and then eventually move into like a larger suite when you have the cash flow to support it. Joe Sanok 00:44:12 Yeah. Awesome. we’ve got a quick question. Let me see what our time is here. Joe Sanok 00:44:16 We still got a couple minutes. some questions about, what’s included in group practice launch. I’m just going to show, the behind the scenes a little bit of. And you’re seeing my admin side of things. but in group practice launch, you’ll start here on your onboarding journey. there’s a welcome video. how to maximize your experience. You go through each step, you know, kind of setting up your profile, those sorts of things, introducing yourself. and then, as you dig in. So I’m going to jump to one of the other cohorts. so there’s all the, the month replays that are in there, all the different courses that go with it. But to your question specifically, will there be resources for onboarding process for hiring clinicians? Absolutely. So here in the announcements and discussion section, we’ve got all sorts of things where people, talk about what’s coming up. what do I do, you know, in paying W2 clinicians for cancelled appointments, systems that you use. making sure that, you know, people know about events that are coming, you know, questions about email, lawyers, accountant. Joe Sanok 00:45:13 I mean, all those things that, you know, you just think of and then you’re like, man, I wish I had a community of other people starting a group practice. And then there is one. so. All right. So next we see there’s some links. Thanks. Awesome. Cool. Well, Andrew, it’s so awesome to have you on the team with practice of the practice. And you bring such skills around kind of this management side and all that. And awesome. Thank you for letting me into your ears and into your brain. Have a great day. I’ll talk to you soon. Thank you so much for listening to the Level Up Week series. I hope you are getting so much help out of this. If you need extra help, head on over to practice of the practice. Com forward slash apply. I would love to spend 30 minutes brainstorming with you as to your phase of practice and helping you determine whether a membership, community, or consulting is right for you. Again that’s practice of the practice. Joe Sanok 00:46:13 Com forward slash apply. And we couldn’t do the show without our amazing sponsors. We are so excited to bring these types of things to you as much as we can, so that you can level up your practice in a way that’s just amazing. head on over to Alma’s website. Hello, alma.com/jo, if you want help with credentialing, if you want help with reimbursement rates and a guaranteed two week payback again, that’s. Hello alma.com/jo. Thank you for letting me into your ears and into your brain. Have a great day. I’ll talk to you soon. Special thanks to the band. Silence is sexy for that intro music. And this podcast is designed to provide accurate and authoritative information in regard to the subject matter covered. It is given with the understanding that neither the host, the producers, the publishers or guests are rendering legal, accounting, clinical or other professional information. If you want a professional, you should find one.