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Any type of investment involves risk and one may not see the impact of his or her investment decision in their future in the hopes of gaining wealth. Doctors are in a high-risk profession and many consider tax structuring for various reasons. Many doctors want it for asset protection.

As a doctor, what sort of structure do you have around your business? A simple tax structure is a sole trader where you have an ABN and you’re operating in your own name. A more complex tax structure is a trust or company and would be good for a more complex business. A more complex tax structure would be good if you have a practice, own rooms and employ staff.

Business structure for doctors

The first benefit of setting up a tax structure particularly in the medical industry is asset protection. Medical practitioners operate in an industry with high professional liability risk so having the right tax structure can split that risk. Another benefit of setting up a tax structure is being able to legitimately reduce taxes for your family. You can grow wealth and create a sellable business. It can be difficult for sole traders to sell their practice because they can’t sell themselves but if they set up a company or trust, they can create systems and processes and can sell the business to another practitioner come retirement time.

Doctors need structuring advice when buying a practice, setting up their own practice or acquiring an existing practice. It would be good to engage an accountant to talk about structuring and ownership of assets and liabilities without holding them in your names personally. Most medical practitioners start as sole traders and when they buy into a practice or acquire one, that’s the only time they think about structuring.

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The right structure will depend on the types of investments involved including managed funds and property shares, entities and objectives. Most medical practitioners end up with a mix of trusts and companies.

Once you have a tax structure, it adds complexity to your finances and compliance. You will be required to lodge annual tax compliance and to pay some additional registration fees. You won’t see the savings immediately and the benefits are long term. Ask your accountants what the costs of setting up and maintaining this structure are. What are the benefits, tax savings and asset protection in exchange for those costs?

As a medical professional, you also have options around superannuation like owning assets such as rooms, shares and companies within it to take advantage of the lower tax environment. Doctors are encouraged to meet with their accountants every year to discuss their tax compliance, any changes in your assets and liabilities and tax planning or structuring. Medical practitioners should be appropriately structured based on their circumstances.

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As you look for different ways to grow and improve your business, seeking professional advice could prove to be an important and helpful decision.

You can click here to speak to a businessaccounting and bookkeeping firm. We also offer hospitality business consultation and mortgage services. We will give you a call to know more about your needs. We will explain to you how we can improve your business.

We would love to help you formulate investment strategies and streamline your processes to take your business to the next level.  Our goal is to help you grow your business, find ways to invest more and increase your productivity.

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