Tax Records for all Flexvets

Part-Time Veterinarians

Fill out a form W-4 provided by the employer, and file your tax return each year based on the W-2 forms you receive from the employer.
 

Employers of Part-Time Veterinarians

View the IRS online information for small business.
Records for a part-time veterinarian should include everything that is required for any other employee. If your part-timer supplies her own insurance, keep copies of paperwork that verifies the current coverage.

• The part-time veterinarian must be paid a regular paycheck from which you withhold taxes as you do on any employee.
• File quarterly federal tax returns (Form 941) with the IRS.
• Make deposits to the IRS as required.
• Have your employee fill out a W-4 form.
• Supply your employee with a W-2 form (give employees a copy of their W-2 by Jan 31; file copies of the W-2s together with a W-3 [summary of W-2s] to the IRS by Feb 28).

Your part-timer should have the following licenses and/or registrations:

• Accreditation.
• State veterinary license.
• DEA license (unless they work under the employer’s).
• State pharmacy license (if applicable)
   

Relief Veterinarians

View the IRS online information about self-employed individuals.
As independent contractors (IC), relief veterinarians pay their own taxes. Your client (employer) does not deduct FICA or federal taxes from your fees.
As an IC, you should receive a 1099-misc form each year from any place where you earned over $600 in one year. (That is your clients’ [employer’s] responsibility, but they may not be aware of it. They will need your social security number or EIN [requested on a W-9] to fill out this 1099 form). You should not have to fill out a W-4, nor should you receive a W-2. But, simply paying your own taxes does not make you an independent contractor!
As self-employed independent contractors, relief veterinarians will not have taxes deducted from their paycheck. (In fact, they do not receive a “paycheck,” but a fee for services rendered.) The relief veterinarian must instead make quarterly payments to the IRS as directed by their accountant (including income tax and self-employment tax). This is the single most-often overlooked budget item for new business people. Don’t get caught in April with a huge tax burden, which would include penalties.
You will fill out a schedule C to record your business income and expenses each year. Notice if any employer included any reimbursements on the 1099s they sent you, and record the income/expense appropriately (see tax deductions).
Relief veterinarians are strongly urged to consult their own certified public accountant before they begin business. Tax laws vary from state to state and year to year. See the appendix for sources of further information.

Records and reporting for state taxes

To find out about the following taxes, contact your State Department of Revenue. Usually, if you’ve obtained a business license, they will be sure to let you know.
In some states, there is a gross receipts tax on services that is not passed on to the purchaser of those services. For instance, in WA state, all service businesses pay a state tax on their gross income. The relief veterinarian is responsible for reporting and paying this tax. Is there a gross receipts tax on services in your state? How much?
There is a sales or gross receipts tax on services in other locations (e.g., NM, Canada), that is added to the fees for services and is passed on to the customer (in much the same way as product sales are taxed). If that is the case in your state, add the tax to your total fee on your invoice; you are responsible for collecting and submitting the money to the state. Alternatively, your state may allow you to ask the veterinarian for a tax-exempt certificate for services. If one is not given, or if veterinary work is not exempt, add tax to your total fee.
Some states have a state tax on business personal property. Does your state levy a tax on the equipment and supplies used by small business (e.g., office and veterinary equipment)? How much?

Does your state levy any other taxes on business? Ask your accountant and the Department of Revenue, then include that expense in your business plan.
 

Employers of Relief Veterinarians

Supply a 1099 form to the relief veterinarian if you paid him or her more than $600 in any one year. Use Form 1099-Misc, and send one copy each to the relief veterinarian (by Jan 31) and to the IRS (by Feb 28). You will need the relief veterinarian’s social security number or employer identification number to fill out the form. You can either ask them for the number, or have them fill out a form W-9 which officially asks them for it. Remember that reimbursements (e.g., for housing) are excluded from the relief veterinarian’s gross income. That is not part of fees paid, but is an expense reimbursement, so should not be part of the total on the 1099 form. (If you inadvertently included it in income, never fear; the relief veterinarian can simply include it in income and then write it off as an expense).
Do not pay your relief veterinarians out of your employee payroll account. Instead, pay them the same way you do other contractors (electrician, drug vendors, etc.) Your relief veterinarian should bill you, and you should pay them, by the job, not on a regular payday.
Keep your records on relief veterinarians separate from those for your regular employees. Set up a “vendor file” for each relief veterinarian. In it, keep written records of the dates, hours worked, and charges for each job. Include the relief veterinarian’s social security number or employer ID number, license and registration numbers, insurance verification, business card, and all other pertinent information. Keep copies of letters and contracts. Record housing and other reimbursements and retain the receipts. If there is a tax on veterinary services in your state, and you have provided a tax-exempt certificate, you should keep that in the “vendor file” you keep for the relief veterinarian.