You have a passion for your chosen vocation and many of you have ventured further in dedicating a major part of your life to specialising in selected areas of medicine. Bravo!
The practise of Medicine is one of the most valuable offerings that one can make and we commend you on your dedication but the objective of this note is to highlight and focus what you are not taught about the business side of practising Medicine e.g. how to save taxes and to protect your personal and practise assets.
In this day and age Doctors are increasingly faced with the possibility of a legal claim by a patient. The human body is one of the most complex and dynamic organisms in the Universe and a myriad of factors can result in an undesired outcome that could result in a claim by a patient.
It is inconceivable that anyone let alone Doctors would place their entire wealth and assets on the line in pursuit of practising their loved profession that can unravel if you are sued.
This begs the question: Why do most Doctors practise in as sole practitioners or in a partnership? Either you do not know what you do not know or you obliviously forge ahead with all your worldly possessions susceptible to being claimed by a creditor or patient.
Got to be insane right?
As a starting point we will conduct the insanity test.
Would you do any of the following:
- Would you drive a car without ever having had a driving lesson?
- Would you captain a yacht with no sea legs?
- Would you skydive without a parachute?
- Would you fly an aeroplane with no flying lessons?
- What about getting into a space shuttle?
Hazarding a guess, absolutely NOT but this is what many Doctors do when it comes to the business part of their practise.
This article is not about the practise of Medicine, the business plan, cash flow, patients, etc.
We wish to highlight the necessity of having the correct legal business structures to carry on and conduct your practise.
We have assisted many Medical practitioners and the one factor that we can attest to is that establishing the optimal business structures is one of the key factors to success or at worst if you fail in ensuring minimal financial pain and at best ensuring that you maximise your after-tax returns and leave a proper legacy on the event of your demise.
Back to the insanity test…
It is unfathomable that a Doctor will practise without the proper training or equipment however that is what is often done.
The correct structures will guarantee that your personal assets are secured from any practise or business vagary that may befall you. If you have an asset intensive practise (e.g. radiology equipment, property etc) the assets of the practise can also be secured.
The ideal business structures will also ensure that you are tax compliant BUT that you only pay the tax that the law prescribes. We often meet Doctors who voluntarily pay too much tax. This is not a crime but criminal as the Income Tax Act clearly stipulates what must be paid.
Life is not a competition but the difference between losing everything you own if you are sued because of your practise versus getting a bloody nose and a bruised ego is a stark difference.
On the other competition track, if you have a successful practise but are paying between 17% to 20% more tax than you should you are going to be at the grindstone longer than you should to achieve your goals versus a Doctor that is properly structured and is saving between 17% and 20% tax on the fees they generate.
The law allows for you to establish robust structures that will ensure personal and practise asset protection and allow for you to be tax efficient to optimally reward you for your dedication to the practise of Medicine.
The question is…
Are you INSANE not to have the ideal structures in place?