Medical, Allied Health & Specialist Medical Health Practitioners
Is it worth getting advice about which business structure is best for my practice?
Unfortunately we have seen more medical practitioner and allied health professional firms and subcontractors with inappropriate or incorrect business structures than any other industry. We have quickly corrected these as required.
It seems to us that there are a number of medical professionals who have not been getting the benefit of complete or fully informed advice that they technically require.
There are a number of somewhat competing objectives to consider when establishing and organising the business arrangements for medial adn allied health professionals, and it can be difficult for a 'jack of all trades' sole practitioner type tax accountant to get it right in thes area as a result.
We have as a result a lot of experience in this area getting it right
In our experience it is definitely prudent and can save a lot of potential problem and cost, to spend some money on professional advice to review a business structure on a regular say 3- 7 year basis, so as to prevent potentially costly mistakes.
In addition a review is advisable whenever there is any life event such as a marriage, significant health change, significant change in assets or liabilities or income levels of related parties etc.
Such a review doesn't necessarily result in any amendments - merely a review - which may take only a few hours of professional time.
We recommend in obtaining such a business structure and arrangements review that you seek these services from a commercial / business lawyer in conjunction with your tax accountant, not just one, or the other.
This is because we believe, and our experience demonstates, that it requires professional practitioner knowledge across these professions to be able to fully advise you of the whole context of issues impacting.
Should I get a review of my business structure from my accountant?
Accountants aren't the best to advise you on the potential liability you may personally confront for professional claims. In addition accountants obviously are not lawfully permitted to advise on bankruptcy law matters. In fact Accountants are not qualified, competent in many cases or legally able to advise on legal matters.
However, on the other hand, an lawyer - without a solid knowedge of financial accounting and tax impact on your business,- will not be able to provide detailed estimates of the impact of any amendment to your business structure they may advise.
A cost -benefit approach is rational for any decision making about having the best business structure - without solid financial accounting and tax know how - this is not possible. Why go to the trouble to amend your business structure if the cure is worse than the disease?
The need for a multi -profession approach by practitioners with experience in this area is also clear when you consider for a moment that most medical & allied health professionals operating in their own practice or as subcontractors should, in order to protect themselves, obtain professional advice relating to:
- Professional liability matters (limit of scope of your insurance cover and how you can address this)
- Property law and bankruptcy law matters (your real estate assets including the family home not in your name)
- Asset protection / bankruptcy / creditors (including impact via claimants on your business and its net assets, and how this can be mitigated)
- Family law (and the impact on you from the family, liability and contingent liability circumstances of business partners etc.).
As well as legal relationship and resulting :
- Taxation and potential liability for your business stakeholders such as subcontactors, deemed subcontractors, employees and deemed employees, and the accumulated potential tax liabilities.
The matters involved require both legal and financial and tax accounting advice and services.
Ascendia has been offering these services in a mult-profession way - as opposed to a jack of all trades way - to ensure that:
- Any advice about your existing business arrangements, or
- Establishments of any business arrangements or
- Any amendments to your business structure
- Appropriate and reasonable for your circumstances,
- That you are fully aware of the issues pertaining to these arrangements, and
- That our advice to you is assured by the backing of the relevant professional body (law and accounting)
- That our advice to you is assured by the backing of the relevant professional indemnity policy (law and accounting services).
Can you outline some of the technical tax issues I should be asking my Tax Accountant about?
Should I Use a Company?
A corporate structure is a relevant consideration in respect of liability. It can offer some protection to you and your business from the actions of other practitioners who operate in the same medical centre or practice, where without your own incorporated business; these other practitioner might otherwise be operating from a partnership in common with you.
In short a medical partnership exposes you to liability for the actions of professional partners whereas a company which you operate out of alone does not.
Potential benefits of using a company:
- Salary Packaging benefits including ensuring superannuation deductibility
- Profits from non-owner practitioners can be paid out as dividends to shareholders
- There can be various classes of Shareholders which can be a benefit where there are profits from non-owner practitioner efforts.
- Professional practitioners can be brought into and out of the company with often less cost using the share registry of the company as opposed to partnership agreements.
- Corporate Identify can improve ease of transition to entirely new owners and perhaps increase value of a practice.
Potential Problems from Using a Company:
- Payroll Tax liabilities need to be actively minimised through how business income is retained by owners
- For a small practice ongoing costs of meeting the compliance requirements can sometimes be higher. This needs to be weighed against other financial benefits like some tax benefits as outlined above.
- Different laws apply to companies than partnerships or sole proprietorships and you need to understand these.
- To stop or 'end' a company you need to finalise accounts and payout net assets to shareholders and complete ASIC documents. A sole proprietorship you can just stop trading...
However we think you should get personal advice about the appropriate business structure which matches best your individual circumstances.
Should I Use a Service Trust / Company?
A service entity is able to be used in a medical or allied health practice and they offer advantages in many circumstances. These entities (sometimes a company is used, sometimes a trust) will supply to the medical practitioner professional business(es) on a fee for service basis, services like:
- Administrative staff
- Management services
- Financial services
There are established guidelines on how these should operate which provides clear operating certainty for their use. We are happy to review your current business structure and advise of there is sufficient financial benefit for your practice to utilise this approach. We can also provide accurate estimates of the financial benefit involved and explain exactly how the approach can work for you.
What Other Areas Should I Inquire About?
Other areas that require close attention because they are so often gotten wrong and because they create substantial financial penalty are:
- Personal Services Income requirements
- Payroll tax, workers Comp and Employer Superannuation requirements
- Subcontractor Agreements.