For many medical professionals, handling financial matters can be challenging at the best of times. But in a post-COVID world where time and resources is stretched to the limit, accountants for doctors play a pivotal role to ensure those looking after the nation’s health are able to manage their books, stay on top of accounting and tax obligations and take advantage of the latest government assistance available.
Because we know accounting services for doctors make a real difference whether you work at a hospital or run your own practice, we want to explain how the best accountants for doctors can help.
Accounting and tax compliance
Let’s start with the obvious. Tax accountants are indispensable to owners of medical practices when it comes to navigating complicated tax rules that often change. Accountants are able to prepare your tax returns, Business Activity Statements (BAS) and financial statements — then lodge them by the filing deadlines.
They’ll guide you to appropriate tax treatment in confusing areas like whether a doctor should be treated as a contractor or employee. When you think about employer obligations around PAYG withholding and superannuation contributions, the wrong classification could be costly to resolve.
Accountants can also identify when Personal Services Income (PSI) rules apply and review your PSI income. PSI rules have fundamental consequences in terms of how practice income is distributed and taxed, so it’s vital to know where you stand.
If you’re a contractor doctor, then advice around whether to operate through a limited company or as a sole trader can help you select a structure that minimises your taxes.
Your accountant will also make sure you claim all deductions you’re entitled to on your tax return, such as parking, license fees and tolls, professional indemnity insurance, tool repairs and so much more.
Since medical services is GST-free, think about the large GST refund you could potentially receive every quarter for practice management fees and other eligible items where you paid GST. The cash flow benefit of this is likely to be significant, so it’s worth let your accountant take the lead to optimise your GST position.
Many accountants — including POP Business — offer bookkeeping services to ease the burden of medical practices with voluminous transactions and records to manage. Even if you prefer to do your bookkeeping in-house, an experienced accounting professional could put in place an effective record keeping system by setting you up with accounting software.
We’ll talk more about accounting software later on, but one of its biggest benefits of is that important documents — from invoices, receipts to tax forms — can all be located centrally on the cloud and easily accessed. This makes identifying and managing your practice income and expenses quick and accurate.
Accountants for doctors provide business advice in the following areas as well.
1. Business structure
For those starting a medical practice, an accountant can guide you through the pros and cons of different business structures. The decision to set up your practice as either a sole trader business, partnership, company or trust have long term impact around the distribution of profits, how you’re taxed and your personal liability if things go wrong.
An experienced accountant for medical doctors is a great resource for finding out how your business is doing compared with other practices. This will help you figure out whether your costs — such as staffing and overheads — are in line with expectations.
3. Budgeting and cashflow
Cashflow management is vital to any medical practice, particularly as you’ll likely be paying off loans in relation to things like specialist equipment or the remodelling of the clinic’s space. Your accountant can work with you to figure out your expected incomings and outgoings for the next 12 months, so you can adjust pricing or reduce costs to prevent negative cashflow.
Additionally, accountants are experts in setting realistic budgets. This is important for debt management or if you want to secure additional borrowing to expand your practice.
4. Business strategy and planning
If you’re looking to attract the bank or another investor, having a well thought out business plan is a good first step. A business plan sets out your vision and how you will achieve it. Again, an accountant can help here by ensuring you’re making reasonable assumptions in your plan — they can even step in to write and pitch your loan application.
Of course, an accountant is well positioned to advise on financing alternatives available and how they work, so you are able to choose an option that best supports your operations.
For a growing medical practice, the right accountant could set you up on cloud-based accounting software to streamline processes like bank reconciliations, payroll and customer invoicing. In our experience, Xero is a fantastic option as accounting software for doctors because it can cope with a large number of transactions and tasks without losing accuracy and speed, when looking for accountants for doctors.
Another advantage with having cloud-based accounting software is the availability of data. Your expenses and revenue over time can be tracked and analysed easily, so you can work out the key things that affect your profitability. You can also use your data to transform the way you engage with patients — being a Xero Platinum Partner, our experts at POP can show you how to do this.
We offer all our clients a 20% discount on their Xero subscription, so talk to us if you’re interested to connect to the cloud.
Asset protection – accountants for doctors
Protecting assets against liability claims from unhappy patients is a key concern for many medical professionals. An accountant will talk through ways to protect yourself — from using an alternative business structure to transferring your assets, and their associated tax consequences.
Finally, accountants for doctors will correctly account for entry or exit of partners and the purchase or sale of practices. Being experts in business valuation, due diligence and tax minimisation strategies, they will ensure you accurately identify the benefits, liabilities, risks and opportunities in a potential acquisition.
In this article, we have laid out the ways in which accountants for doctors add value. If you’re after affordable accounting or business advice, Pop Business offers a membership subscription for only $79 a month — it’s a great investment to save you time and energy so you can focus on building a successful medical practice.
We know you have limited time and resources. But whether it’s managing financial records or optimising your tax position, we are here to help you achieve the best outcome. So head to POP now and learn more about accountants for doctors!