Posted by Matt Connor
on 14 May 2015
If you're a doctor looking to set up in private practice, you'll need to address a range of financial factors.
At Medical Financial Group, we work closely with our clients so that they can achieve the best business and tax outcomes.
Whether you're setting up a new medical or dental practice, buying into or joining an existing practice, we suggest you think about the following:
Doctors may consider different types of business structures for their working arrangements. There is no one-size-fits-all - suitability will depend on the aims and needs of each individual. The structure you choose should be guided by your personal circumstances. These include where you work, as well as the infrastructure and staffing requirements you need to operate.
Keep it simple as you consider which structure best suits your needs. Bigger, more complex business structures are not necessarily better. Unless there are complexities including shared costs for rented rooms, hired equipment, etc. it may be best to operate as a sole trader.
Even if you are entering shared arrangements, we would generally advise avoiding partnership entities as they involve joint and several liability.
Whichever structure you choose, the income individuals receive is classed as Personal Service Income (PSI). PSI's underlying rules dictate all structuring and tax administration for any type of service provider including doctors and dentists. The Australian Tax Office defines PSI as a reward for, or the result of, your personal efforts or skills.
While PSI is generally taxed in the same way as any other income, a key difference is fringe benefits for private use exemptions. Fringe benefits are an extra benefit that supplements an employee's wage or salary, for example a company car, private health care, etc. The most common benefit for a separate structure (in contrast to a sole trader) is for the private use of a motor vehicle. Under a separate structure, if you need a car for work and another as a family car, this can save you tax.
Keep in mind that your key consideration should be to protect your assets as well as put in place thorough tax planning arrangements. These should comply with the law while achieving the best tax outcomes and enabling your business to operate more efficiently and profitably.
At Medical Financial Group, we take a proactive approach to our clients' tax and accounting needs. Please feel free to contact us with any questions you may have via phone: (07) 3363 5800 or email: firstname.lastname@example.org