W2 vs 1099 for Therapists: Which Employment Model Is Right for Your Group Practice?
Should you hire therapists as W2 employees or 1099 contractors? This is a common question for group practice owners. Misclassification can lead to penalties, poor team cohesion, and burnout. This guide outlines the key differences and helps you decide based on your practice model.
W2 vs 1099: The Key Differences
| Category | W2 Employee | 1099 Contractor |
| Taxes | Employer withholds | Individual pays their own |
| Schedule | Employer-controlled | Flexible by contractor |
| Benefits | Eligible for benefits | No benefits provided |
| Policies | Must follow company rules | Independent clinical approach |
| Equipment | Provided by employer | Uses own equipment |
When to Use W2
- You want to set work hours and offer supervision
- You want consistent client experience
- You provide tools and resources
When to Use 1099
- Part-time or seasonal help
- Therapists with other jobs or businesses
- You want minimal overhead and flexibility
Example Scenario: A group practice owner hires two part-time therapists who work only evenings and weekends with their own laptop and client load. These clinicians operate independently and are paid per client session. A 1099 model is more appropriate. On the other hand, a full-time therapist with a fixed schedule, employer-provided office, and supervision should be hired as a W2 employee.
How We Help We support both models by building billing systems that track pay splits, generate pay reports, and remain IRS-compliant. Whether you pay by session or salary, we help keep your compensation clear and smooth.
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