The Power of Agency: Managing Your Earnings Through a Micro-Business Framework

If you are stepping into a new professional role, whether it’s a full-time job or a side gig, there’s an question that should arise about your earnings: Do you want to be an employee or a non-employee? You should be the one to answer this. I suggest you not passively let your employer determine this.

Your answer to this question, falls back to your prevailing mindset about yourself and whether you identify as an individual-employee or as a micro-business. The reality is that every one of you have the power to choose to identify yourself as a micro-business.

When you have agency over your professional life, you alone determine this identity. I believe that marketplace forces have colluded to steal our tribe’s professional agency. It doesn’t have to be that way; your secret weapon to preserve your autonomy and agency is a micro-business framework.

You Are A Micro-Business

When I say you are a micro-business I am referring the following basic characteristics

• You are single member business since you are the only employee and owner

• The lean business model has one intangible product: your professional services

• The business is flexible in the marketplace including its visibility, mobility, and location

• You choose the business entity as unincorporated (sole proprietor, LLC, etc..) or incorporated (PC & PLLC that are designed for licensed professionals.)

• You choose the federal tax classification of the business entity

The simplest approach to establishing yourself as a micro-business is to call yourself a sole proprietor, with the pros being a simple setup, no separate business tax filings, and total control over the business. However, the cons include unlimited personal liability. Many physicians choose this option for its simplicity, but I recommend better alternatives due to the lack of liability and asset protection as a sole proprietor, which is crucial given your high net worth.

Your preference to be called an employee or a non-employee micro-business will determine whether you fill out an IRS W-4 versus an IRS W-9 form. Most employers, even those seeking out top-tier physicians, tend to assume you’ll be an employee, thus handing over a W-4 form without a second thought. But as a physician, you have the power to operate as a micro-business, to shift the dynamic and define your own status as an independent contractor. This post will explain why viewing yourself as a business owner, choosing a W-9 form, and structuring yourself as a micro-business can provide substantial financial advantages and increased professional autonomy.

1. The W-4 vs. W-9 Distinction

At its core, the choice between a W-4 and a W-9 form boils down to one crucial question: are you earning income as an employee, or as a non-employee independent contractor? This choice impacts not only your tax status but also your ability to structure yourself as a business rather than a conventional employee.

• W-4 Form: The IRS uses this form for employee income. When you fill it out, your employer will withhold taxes from your paycheck, contribute to Social Security and Medicare, and issue you a W-2 at year’s end.

• W-9 Form: This form designates you as an independent contractor. Instead of receiving a W-2, you’ll receive a 1099 at the end of the year, leaving you responsible for self-employment tax and empowering you to control your income and expenses, capitalizing on tax benefits that aren’t available to W-2 employees.

While employers are technically the “responsible party” when it comes to selecting the form for tax purposes, as the physician, you have a voice—and it’s stronger than you might think. By presenting yourself as a micro-business, you not only gain control of your tax and financial strategy but also establish yourself in a way that opens up numerous benefits and advantages in the marketplace.

2. The Power of Viewing Yourself as a Micro-Business

If you’re a physician, especially with side gigs or locum tenens work, adopting the mindset of a business owner can radically reshape your financial landscape. A micro-business mindset allows you to leverage your independent contractor status to capture tax efficiencies that are simply not available to salaried employees. Here are some reasons why “calling yourself a business” is worth pursuing:

• Agency Over Earnings: Operating as an independent contractor grants you a level of autonomy that extends beyond your tax status. You’re positioned as a business rather than as a part of another entity’s hierarchy. This power gives you a say in your contract terms and influences the scope of work you’re willing to accept.

• Increased Tax Deductions: When you operate as a business, a wide range of expenses (professional memberships, equipment, travel for work purposes, etc.) can be deducted from your gross income, thus reducing your tax liability.

• Greater Retirement Planning Opportunities: Independent contractors can access retirement accounts with higher contribution limits (e.g., SEP IRAs and Solo 401(k)s), which can help accelerate your retirement savings.

• Potential for Business Structuring: As a business, you can choose to establish a structure that maximizes your tax and liability benefits, from a simple sole proprietorship to a PLLC or PC. For physicians, forming a professional limited liability company (PLLC) or professional corporation (PC) and electing to be taxed as an S-corp often brings even more tax efficiency and asset protection.

3. Simplest Micro-Business Structures for Physicians

Starting with a single-member sole proprietorship may seem easy and convenient, but a few simple changes can significantly increase your protections and tax savings. Physicians, especially those in high-income brackets, may benefit from more sophisticated structures. Here’s a look at a few common structures for micro-businesses in the medical field:

• Sole Proprietorship: The simplest form of business, requiring minimal setup. However, sole proprietorships offer limited legal protection and may not be the best fit for professionals with high liability risks or substantial net worth.

• Professional Limited Liability Company (PLLC): This structure provides liability protection by separating personal and business assets. It’s also flexible for tax purposes, allowing you to opt for S-corporation tax status, which can save on self-employment taxes and facilitate better tax planning.

• Professional Corporation (PC): Similar to PLLCs, PCs allow physicians to shield themselves from certain liabilities while also offering S-corporation election potential. PCs may also give a physician more credibility in the eyes of other businesses and patients.

  Read More: Professional Micro-Corporations: Should I Start A PC or a PLLC?

Through these structures, a physician can maintain their professional standing while also reaping the financial benefits of a business entity.

4. Take Control: Request the W-9 Form as an Independent Contractor

Even if an employer is accustomed to hiring physicians as W-2 employees and thus asking you to complete a W-4 form, you’re fully within your rights to request, or even insist, on filling out a W-9 form and operating as a contractor. This approach puts you in the driver’s seat, transforming each professional role into a strategic income source for your micro-business.

From a tax efficiency standpoint, physicians who consistently approach each job with the mindset of a business owner are better positioned to capitalize on tax deductions, expense tracking, and retirement savings. By standing firm in your preference to be treated as a micro-business, you can set the tone for all future engagements and develop a track record of professional independence.

5. Benefits of the W-9 Form: The Independent Contractor Advantage

Choosing the W-9 form grants you a unique set of benefits that reach beyond just tax strategy. Here’s a look at what you gain by thinking—and acting—like a business:

• Financial Independence: With a W-9, you gain control over your tax payments and can implement strategies to minimize them through business deductions and expenses. For many high-income earners, these tax savings can be significant.

• Flexibility in Multiple Income Streams: Independent contractors are empowered to job stack more easily. A W-9 mindset allows you to take on multiple roles—from locum tenens to telehealth consulting to expert witness testimony—without being bound to one employer.

• Enhanced Professional Credibility: Patients, businesses, and collaborators alike view you differently when you operate as a business. When you’re a professional entity, you command respect and authority that may not be as readily extended to a traditional employee.

• Preparation for Growth: Building your practice as a business from day one allows you to scale more seamlessly, expand your network, and adapt to new roles or services as your career progresses.

6. The Value of Choosing Your Business Identity Wisely

It’s easy to sign a W-4, get on the payroll, and let your employer handle taxes and deductions, but taking the time to establish yourself as a business will set you up for long-term benefits. W-4 vs. W-9 isn’t just about a form; it’s about choosing how you’re defined in the marketplace and determining who’s in control—your employer or you. As a physician, viewing yourself as a micro-business enables you to gain financial, professional, and personal advantages that a traditional employee may not have.

Ready to Become a Business?

If you’re ready to take charge of your financial future and gain the advantages of calling yourself a business, now is the time to act. Start by reaching out to me for a SimpliMD personalized micro-business consult for just $99. This consultation includes a full one-year SimpliMD membership worth $2,500 in business tools. I’ll review your personal situation and offer some practical steps to help you embrace the micro-business life.

If you are early in your micro-business journey, and you need some practical resources consider my SimpliMD’s Business Plan Bundle. This includes a Business Plan Template crafted specifically for self-employed doctors, a Micro-Corporation Budget Template that saves you hours of time, and a SWOT Analysis Template designed to help you optimize your business planning.

Want to go even further in taking control of your career? Check out my course “Creating a Practice Without Walls.” This course guides you through creating a micro-corporation, offering you agency in the marketplace and equipping you with the knowledge to confidently operate as a business.

In the your professional journey, understanding your options between W-4 and W-9 is a powerful first step. Make it a priority to structure yourself as a business and unlock a new level of financial control, professional autonomy, and career satisfaction.