Q&A was part of Next Level Practice, the most supportive community for therapists starting a private practice. In this video, Joe answers the question based on what is involved in adding a 1099 to your practice.
What is involved in adding a 1099 to your practice?
First, for those of you who don’t know what a 1099 is – before we get to the question – there are two different ways to have people work at your practice. You have a 1099, independent contractor; that’s somebody that’s within your practice, but they’re fairly independent. You don’t micro-manage them, you don’t buy them business cards, you don’t give them the paperwork. They are sort of a business within your business. Then, on the other side, there’s a W2 which is an employee and so you need to follow all of the employment laws, etc.
Ideally, you should work on filling up your 1099’s case load over and above yours. This is because it’s really scalable. The hardest person to bring on in your practice is your first clinician. In the same way as getting your first client is the hardest; to go from zero to one is the biggest jump; going from zero to one clinician in your practice is the biggest jump. So, the sooner that you can figure out how to get them onboarded, how to get them full, that’s just money in the bank. And then, it’s a lot easier to bring on that second, third, fourth, and to continue to grow that group practice.
So, let’s just run a few numbers. The structure that I recommend for 1099s is that, until they bring in $2,500 per month, it’s a 50/50 split. That’s called the ‘Onboarding Phase’. Everybody can change their numbers up, but this is how I do it. After that, they move to ‘Full Clinician Phase’. For that phase, it’s 50/50 for the first $1,000. After that, it’s a 65/35 split for the next $1,500, and then at $2,500 it’s the 75/25 split.
Let’s say that your rate is $135 per session and that the new clinician’s rate will be $100 per session. If you’re able to get the clinician up to 15 sessions per week, that’s $1,500. Times that by four weeks, that’s $6,000 a month. That would mean that, of that $6,000, the first $1,000 would be split 50/50 between you and the clinician, i.e.: $500 each. The next $1,500 will be split 65/35, i.e.: you receive $525. Finally, the remaining $3,500 will be split 75/25, i.e.: you receive $875. So, in total, you will get $1,900 extra per month. Times that by 12 months, that’s an extra $22,000 per year, per clinician.
Also, as soon as you get that one going, they’re going to be on autopilot. It’s going to be so easy. So, I would say, get that person going. Get them ranking up there. And then, as soon as you can, get another person up there. Even if they are just working on Saturdays, or on Thursday nights, get them going, because it often takes time to get it going.
Joseph R. Sanok, MA, LLP, LPC, NCC
Joe Sanok is an ambitious results expert. He is a private practice business consultant and counselor that helps small businesses and counselors in private practice to increase revenue and have more fun! He helps owners with website design, vision, growth, and using their time to create income through being a private practice consultant. Joe was frustrated with his lack of business and marketing skills when he left graduate school. He loved helping people through counseling, but felt that often people couldn’t find him. Over the past few years he has grown his skills, income, and ability to lead others, while still maintaining an active private practice in Traverse City, MI. To link to Joe’s Google+ .