Whether you are a Private Practitioner, managing your own clinic or plan to do so in the distant future, you are probably aware of the difficulties and challenges you need to face with when it comes to managing your finances; decreasing your overall tax, managing your business and personal expenses. Here is a basic guide that can assist you:
Setting Up Your Business:
When first setting up your company, it is important to have an understanding of the different structures this may include as this in the future and throughout your career is going to effect your tax. Here are 3 most popular business structures in the UK
Private Limited Company (Ltd) –
This is the most popular to the limited liability, potential tax advantages
Liability of the shareholders is limited to their investment. The personal assets of a shareholder is not effected if the company is dissolved.
Public Limited Company (PLC)
Legal entities in their own right. Opposite from a private limited company, the shares of a PLC can be traded in the public market and this is often used to raise finance.
Limited Liability Partnership (LLP)
Similar to a traditional partnership and also has limited liability. This structure is profit driven and is generally the most popular choice of law and accountancy firms.
Calculate your expenses;
Know what is an expense in your industry; this can include;
By setting up your business expenses accordingly and not interfering them with your personal expenses, you will be able to keep you overall tax amount considerably lower.
Tax law says that an expense is allowable for tax if it is incurred ‘wholly and exclusively for the purposes of the trade’. If an expense is incurred for more than one purpose, i.e. business as well as personal use, a deduction for any identifiable proportion of the expense which is incurred ‘wholly and exclusively for the purposes of the trade’ is allowable. We have set out some of the types of expenditure that may be allowable. It should not be seen as an exhaustive list. What is allowable depends on the facts in each case.
Organize an adequate Payroll system:
When managing your own clinic, it is important to understand the legal requirements of employee taxation. You must register every employee to PAYE through HMRC to collect Income Tax and National Insurance from employment if your employees are paid 113 or more a week. It is also essential to keep payroll records of these employees.
Small businesses, including payroll for GP surgeries that do not have an internal facility will require to set up a system in order to pay workers, keep things organised and running smoothly. Larger companies may prefer to outsource the complete payroll service rather than employ specialist staff.
We specialise in Accounting for dental practices, doctors and other private clinics.