Why You Should Transition to W2 in your group practice with Andrew Burdette | POP 1001

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Have you been chewing on whether or not you should switch to the W2 employee model in your private practice? Are you nervous about being misclassified by the IRS due to 1099 issues? What’s the basic background to keep in mind when considering the switch to W2?

In this podcast episode, Joe Sanok speaks about why to transition to W2 in your group practice with Andrew Burdette.

Podcast Sponsor: Therapy Notes

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Meet Andrew Burdette

A photo of Andrew Burdette is captured. He is the host of the Grow a Group podcast.

Andrew founded Mindful Counseling PLLC in Asheville, NC shortly after completing his graduate program in clinical mental health counseling. At the start of the pandemic, he pivoted to an online solo practice, and in 2022, began to grow a group practice. He most enjoys helping clients and colleagues identify what ignites their passions and assisting them in creating a life rooted in authenticity. Andrew approaches his business development with alignment in mind and enjoys the integration process connecting the many puzzle pieces and systems required to run a successful practice.

Visit Andrew’s website and Apply to work with him.

Email him at [email protected]

In this Podcast

  • Potential risks of using the 1099 model 
  • Handling being “misclassified” by the IRS
  • Preparation for switching to W2
  • Andrew’s advice to private practitioners

Potential risks of using the 1099 model 

One of the biggest risks with using the 1099 model in your private practice is from an IRS and tax standpoint, and their classification as workers. 

There are certain states like Colorado and California that, if you are going to do a group practice to the best of my knowledge, there’s no way to do a 1099 contract structure. (Andrew Burdette)

Some states have very clear laws on how you are allowed to hire people into your practice, and under which conditions, so it is prudent to check. 

Sure, it is more tempting to go with hiring under a 1099 employment structure since it may seem like it can save you time, money, and effort, but in the long run, it may cost you these three things. 

Contracting is an easier way to start. There’s reduced liability from a relational person to your contractor, but you also have a lot less control and direction over how they do their job and that puts you as the business owner at greater risk. (Andrew Burdette)

Sometimes the 1099 structure means that you need to work with people “under good faith” and expect that they will do things a certain way, but if they don’t, then you don’t have much backing from the law or as the manager to make them do it differently. 

Therefore, to create a more cohesive and intentional work environment where everyone follows a similar structure, W2 is more helpful. 

Handling being “misclassified” by the IRS

How much are you instructing people to do a particular task in a certain way? 

For example, under the 1099 model, you can incentivize the use of EHR and paperwork and any functions that assist in doing counselling in your practice.

However, you cannot mandate that they do it. So, you cannot necessarily do a discount or percentage split on whatever your pay model is. 

You can’t really say, “I want notes done this particular way …” but for the most part, think of it as if you were hiring a plumber. You don’t really get to tell a plumber how to be a plumber. And so, if you want to tell your clinicians, “This is how the practice is going to do business …” then you’re kind of telling the plumber how to be a plumber and that ends up in this misclassification category. (Andrew Burdette) 

Preparation for switching to W2

  • Look at your numbers first! Don’t offer a split too big in the beginning
  • Check out your insurance options 
  • Organize your taxes with an accountant 
  • Brainstorm various employee benefits that you could offer
  • Check your current existing overhead costs before factoring in your W2 payment model 

If you want to learn more about the intricacies of working with the W2 employee structure, have a look at our new W2 consulting package with Andrew

Andrew’s advice to private practitioners

If you are planning on opening up a group private practice, consider going with the W2 model from the start! 

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Meet Joe Sanok

A photo of Joe Sanok is displayed. Joe, private practice consultant, offers helpful advice for group practice owners to grow their private practice. His therapist podcast, Practice of the Practice, offers this advice.

Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners who are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.

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