Accountants for Doctors

As a GP there are a variety of structure options available to run your business. These include:

Sole trader: Cheap to set up and run, but with unlimited liability – and the highest tax rates could apply.

Family or Unit Trust: These are a flexible option that can work well for solo operators, or with other practitioners. Family or Unit Trusts also allow flexibility for tax distributions and longer term tax concessions. They can, however, be limiting in some circumstances if you wish to scale.

Company: Company structures provide limited liability and a capped rate of tax at 27.5%. However, they're a more rigid structure than a trust and need to comply with the Corporations Act. Companies do scale well and allow for multiple owners and changing circumstances.

Partnership: Partnership structures can suit two or more doctors who want to carry on a business and split profit. They're relatively cheap and easy to maintain, but partners are liable for each others' actions.

Associateship: This is when two or more doctors operate a practice together, but each doctor operates distinctly, and handles their own tax and legal requirements.

Assistantship: Applicable to non-owner doctors. In this situation the non-owner doctor is considered an assistant to the owner doctor. The assistant is viewed as an employee and is subject to employment laws, leave entitlements, superannuation etc.

This is a common trend for medical professionals, and whilst it doesn't suit everyone, it can provide advantages in:

• Reducing overheads
• Sharing back office support
• Attracting and retaining better talent
• Passing on cost savings to patients
• Getting more consistent referrers
• Upgrading to a better location
• Sharing costs of equipment upgrades

When a practice is consolidated with another medical professional, a management or service fee is usually put in place. This covers overheads such as rent, electricity, reception and administration staff.

It's important to note that it does not usually cover things like professional indemnity insurance, registrations and training.

Typically the management fee is between 30% and 40% of billings, and this also includes collecting cash from insurers and patients.

Careful planning and consideration should be undertaken before an amalgamation is considered.

If the correct administration and procedures are followed, additional GPs and allied health professionals are not employees and can be considered independent contractors within the practice.

It's common to pay an agreed percentage of the total amount of income they generate.

They are not required to have an employment contract, as they are not employees and are not paid under the Fair Work human resources guidelines.

Best practice is to provide a letter of engagement that outlines the terms of their tenure.

The terms in the letter should include:

• Agreed start date
• Agreed hours
• Entitlements
• Services supplied by the clinic

Once these steps are completed, staff generally aren't classified as employees and the clinic is not liable to pay superannuation, workcover or payroll tax.