Your medical practice and the right business structure

Well, that is all well and good but we can do better. There are ways within the rules and laws to maximise your return from you medical practice and give you the highest reward for your hard work.

Running a medical business through a structure is an important decision to make, possibly the most important one of your career.So what are the options in choosing which structure to operate you business through?

A company is an incorporated entity which under law is considered to be an individual in its own right. That is the company itself is responsible for its actions, its taxation obligation, its civic obligation and its financial reporting obligation. The company acts as the vehicle to conduct business, you the medical professional become an agent of this company and the decision maker for the purpose of creating wealth for the shareholder. In most cases the agent and the shareholder are one and the same person so the company acts as the intermediary for your personal medical expertise.

A trust is an entity of which a medical business can practice through, the difference being it is not a separate legal entity like a company. It has the sole purpose of organising and accumulating wealth for the benefactors of the trust and it uses the trust deed to set down the rules on how the wealth in managed. Your practice income is never held in the trust, it is distributed out every year to the beneficiaries whom are the true recipients of the wealth creation and the entity that is taxed. The trust can provide many wealth creation strategies for your business if set up correctly.

A partnership is defined as two people working together in common business. In the medical profession this is an old fashion way doctors would set up practice together. A partnership is not a separate legal entity instead it is two parties together in business. So the income and the expenses of the joint venture is collated and then split equally between the parties. The parties then report this income on their own right. Not a very popular method of business in modern times but always an alternative for simple business agreements with other doctors.

Sole Trader:
This is simply a doctor conducting their business as an individual. Whether it is locum work, full time contracting or running a practice if there are no other entities involved you would be considered a Sole Trader. This although being the simplest and easiest way to do business it is very hard to create wealth creation strategy that would maximise your return for your work.

The use of entities is not limited to one, you could implement a whole combination of them all as part of your wealth creation strategy. Contact our highly skilled professional and MEDIQ to discuss what the best structure is for you.