What does the practice actually pay beyond an employee's wages?

The wage is only the starting number. Once someone is on payroll, a whole stack of employer costs sits on top of it, and knowing that stack is often the difference between a hire that works and a hire that quietly drains the practice.

Employer payroll taxes come first. You match your employee’s Social Security and Medicare, currently 7.65 percent of wages up to the annual Social Security wage base. Then there is federal unemployment tax on the first slice of each employee’s wages, and state unemployment insurance, which varies quite a bit by state and by your own experience rating. Workers compensation coverage is required in most states even for a small clinical office, and that premium is calculated as a percentage of payroll based on your state and job classifications. These rates and thresholds shift, so please confirm current numbers with your tax professional.

After that come benefits and the quieter costs. Health insurance contributions, a retirement match, paid time off, license renewal or CEU stipends, malpractice coverage, an EHR seat, payroll software fees. There are also the hours you pay for that never bill, like documentation time, team meetings, supervision, and the slots that open up when a client cancels. With a W-2 clinician, the practice absorbs the empty slot, and that shows up in your margin even though no line item is labeled that way.

This is why a 60 percent split means two very different things depending on classification. Picture an associate who collects $10,000 in a month. At a 60 percent W-2 split, the wage is $6,000, and once employer taxes, unemployment, workers compensation, and even a modest benefit contribution land on top, the practice’s real cost often runs $7,000 or more. At a 60 percent contractor split, the practice pays $6,000 and stops there, while the clinician carries self-employment tax and buys their own coverage. Comparisons circulating now put the gap in effective value at roughly a thousand dollars a month on a caseload like that. Read those figures as illustration rather than a quote for your practice.

Whether a role should be W-2 or 1099, and what benefits to offer, is a decision for your attorney and your tax professional. My job is making the real cost visible. When payroll runs through your books properly, your monthly reports show the fully loaded cost of each clinician, so you can see what adding the next associate really takes.

Bookkeeping for therapists and group practices is the whole of what I do, and I am happy to walk through your numbers with you. Book a consultation with me and let’s look at them together.