From Clinician to CEO: CRNA Business Structures and Tax Strategies for 1099 Success
The first post in this series explored a rising trend: the shift from W-2 employment to 1099 independent contractor status for Certified Registered Nurse Anesthetists (CRNAs). For CRNAs, moving to 1099 work can mean more independence, financial control, and lifestyle flexibility. But making the transition comes with its own set of challenges, from setting up your business structure to handling taxes, contracts, and the day-to-day realities of working as a 1099.
This is the second part of our guide for the aspiring CRNA entrepreneur, and it's all about the nuts and bolts of setting up a business and understanding the tax strategies that can transform a high-income professional into a truly savvy business owner.
The Foundation: Choosing Your Business Structure
The first critical decision for any independent CRNA is how to structure their business. This choice dictates everything from legal liability to tax obligations. While many new business owners outside of medicine default to a sole proprietorship due to its simplicity, this is rarely a suitable long-term solution for a high-risk medical profession.
That's why most independent CRNAs choose to form a Limited Liability Company (LLC) or a Professional Limited Liability Company (PLLC). An LLC is a separate legal entity from its owner, providing a crucial layer of liability protection that shields personal assets from business liabilities. While an LLC requires state registration and associated fees, typically ranging from $35 to $500, it grants enhanced credibility vs. a sole proprietorship and the ability to open a dedicated business bank account, which is vital for organized financial management.
A PLLC offers an additional safeguard, designed specifically for licensed professionals to protect against certain types of claims within the business structure. Since state laws vary, you’ll want to check your state’s specific guidelines to determine whether an LLC or PLLC is the right fit.
The Tax Advantages of S-Corp Status
By default, a single-member LLC is taxed as a sole proprietorship. This means that all business profits are subject to the full 15.3% self-employment tax, which covers both the employer and employee portions of Social Security and Medicare. Although easy to manage, it comes with the drawback of exposing all income to the full self-employment tax.
The good news is that by electing S-Corporation status with the IRS, a CRNA can significantly reduce their self-employment tax liability. The S-Corp model allows the owner to split their income into two distinct buckets: a "reasonable salary" and the remaining profit, which is taken as a distribution. In this way, the owner only pays the 15.3% self-employment tax on their reasonable salary, while the remaining profits can be taken as distributions that are not subject to this tax.
For a CRNA with a substantial income, this strategy can lead to tens of thousands of dollars in annual tax savings. For example, on a $250,000 independent profit, a sole proprietor would pay over $38,000 in self-employment tax; whereas a CRNA with an S-Corp paying a reasonable salary of $120,000 would pay only around $18,000, saving nearly $20,000. This is often the biggest financial advantage of the S-Corp model.
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Beyond the S-Corp: Maximizing Financial Control
The S-Corp election is just one of several powerful financial tools available to a 1099 CRNA. Beyond the ability to structure income, the U.S. tax code grants self-employed clinicians access to deductions and strategies that W-2 employees can’t use.
Business expenses become a major lever in reducing taxable income. In addition to malpractice insurance, licensing, certification, and continuing education, a 1099 CRNA can often deduct health insurance premiums, professional association dues, clinical software, and even the depreciation of equipment purchased for work. Travel to temporary assignments can also be written off, including airfare, lodging, rental cars, and meals tied to business activity. When a home office is used regularly and exclusively for business, a portion of housing costs such as rent, mortgage interest, utilities, and property taxes may qualify as deductible as well. Careful record-keeping is what turns these opportunities into material tax savings.
Retirement planning provides an equally powerful advantage. A W-2 employee is confined to their employer’s retirement plan, but an independent CRNA can open a solo 401(k) and contribute both as employee and employer. For 2025, the combined contribution limit is $70,000, and those aged 50 and above can contribute even more. High earners may take it a step further by layering in a Simplified Employee Pension (SEP) IRA, a cash balance pension plan, or a backdoor Roth IRA to maximize long-term tax deferral and wealth-building. This allows a CRNA to save for retirement and build wealth at a rate that is not possible within a traditional W-2 employment structure.
A Call for Mentorship and Professional Guidance
The transition to independent practice is a journey from clinician to CEO. While the rewards of greater income and autonomy are significant, they also come with the responsibility of mastering a new set of skills, from business formation to tax planning and compliance – all things that are rarely taught in a CRNA program.
But starting an independent practice doesn’t mean you’re going it alone. We encourage any CRNA contemplating a transition to 1099 work to lean on mentors and colleagues who have already made the jump, and partner with tax and financial experts to help with the practical aspects of forming your own business. In particular, a 1099-focused CPA or financial advisor can help you navigate the complexities of forming an LLC or PLLC and electing S-Corp status, while ensuring compliance with IRS regulations.
For CRNAs ready to make the transition to 1099 work, thoughtful planning and professional expertise can help you make the most of independent practice as a financially rewarding and fulfilling career path.
This article was reviewed by a licensed tax professional to ensure accuracy, but it is for educational purposes only and should not be taken as personal tax advice.
