Medical transcriptionists (MTs) looking for employment have several options open to them. One of the most common is as independent contractors working from home. Companies advertise this in employment ads as IC status.
Definition of IC Status
According to the IRS website, a business should classify a person performing work for them as an independent contractor if the business has the "right to control or direct only the result of the work and not the means and methods of accomplishing the result."
An example of this in the case of a medical transcriptionist working from home is that a company can expect the work do be done by a certain time but cannot demand the MT is at the computer doing the work during specified hours.
Independent contractors are essentially self employed. Any companies they work for do not have to withhold taxes for them. ICs need to pay their own income tax as well as Social Security and Medicare taxes which are included in the self-employment tax.
Duties of a Medical Transcriptionist IC
Most ICs receive the 1099-MISC tax form yearly from any companies they work for. However, the MT is expected to keep track of all the work they do and invoice their accounts appropriately.
At-home medical transcriptionists generally get paid on a per line production basis. MTs keep track of their line counts usually in one of two ways. The company they work for either has a transcription platform that gives a daily line count or the MT does transcription in a word processing program on their computer such as Microsoft Word. MS Word has a line counting utility already built in. The MT then invoices the total line count at the agreed upon rate to the company to be paid by a specified date.
Also, depending on their specific situation, MTs may need to have a DBA, also called doing business as, which is a name for their business. They are also responsible for filing all the paperwork and keeping the records necessary of having a DBA.
Benefits to MT Companies
When companies hire medical transcriptionists as an independent contractors, they save on overhead operating costs as well as taxes. However, they have to be careful not to cross the line of directing too much of how the IC does their work or the IRS will classify this as an employer/employee relationship and expect the employer to pay taxes accordingly.
Benefits and Drawbacks of Being an Independent Contractor
The most obvious benefit of doing medical transcription as an independent contractor is the freedom in scheduling work. However, ICs are not guaranteed work and don't get employee benefits such as paid time off and sick days. An IC MT may have to work for more than one company to earn a living.
Independent contract work is still an attractive option for many medical transcriptionists who value the freedom IC status has to offer. For these MTs, the convenience and cost-effectiveness of working from home is what draws them into the profession to begin with.
Patricia Deneen - Patricia Deneen works at home doing medical transcription and web content writing. She was a professional massage therapist for 10 years ...
