A more significant tax change is that you now must pay both halves of the payroll taxes, Social Security and Medicare. Typically, an employer and an employee split this cost equally; however, as an independent contractor, you are the employer AND the employee and are now responsible for both.

Independent contractors are also responsible for all of their own benefits, with the frequent exception of malpractice insurance. Thus, you will now be choosing and funding your own retirement accounts, paying for your own health insurance, and taking care of your own licensing, credentialing, and continuing medical education (CME) costs. With the additional cost of benefits and payroll taxes, an independent contractor should be paid significantly more than an employee doing the same job. For a typical emergency physician, about 10 percent more is a good rule of thumb, but it is best to calculate the exact difference when comparing jobs of different types.

The best retirement plan for a typical independent contractor emergency physician is an individual (solo) 401(k). In 2024, a full-time emergency physician under 50 should earn enough to max out the solo 401(k) with a $69,000 contribution. High savers may add a cash balance defined benefit plan to the solo 401(k). Solo 401(k)s can be opened for free at Fidelity or Schwab, but for a relatively low fee, a better, customized plan with more features and better service is available from smaller, boutique vendors.

Business owners, like an independent contractor emergency physician, can deduct their legitimate business expenses. “Writing off” these expenses does not mean you get them for free; it just means you are allowed to buy them with pre-tax dollars. This reduces the cost of things like CME, scrubs, and other business expenses by 25 to 45 percent. Items used partially for personal use are deductible only to the extent they are used in the business. If 10 percent of the use of your phone is for business, you can deduct 10 percent of its cost. While business mileage is deductible, your commute to the hospital from home is not generally business mileage.

It is important to keep your business affairs separate from your personal affairs. Thus, all business income and expenses should be run through a separate business bank account. A business credit card is probably a good idea too, although it is just as dumb to carry a balance on a high interest rate business card as a high interest rate personal card.