Medical professionals are constantly juggling their day-to-day practice and the business side of things.
But, let’s face it, as a doctor, you’ve got your hands full with patient care, so the business side of things and financial planning tends to take a backseat.
While a doctor’s primary goal is to focus on providing health services to their clients, it’s important that they don’t neglect the overall health of their business operations.
That’s where choosing a good accountant comes in.
Hiring an accountant for your medical practice goes beyond just crunching numbers. A good accountant will maximise your tax return through doctor tax deductions and help you with business planning for your practice.
So, in this guide, we will explore why doctors need a specialised accountant and what you should look for when choosing an accountant in the medical industry.
Why Do Medical Professionals Need Accounting and Taxation Services?
The medical industry is more complicated than most, making it challenging for doctors to manage their finances and do the necessary financial planning.
An ideal accountant for doctors will be able to demonstrate experience of working with medical and dental professionals.
They should also know and understand the particular complexities surrounding medical accounting within the healthcare industry, such as meeting tax obligations, tax planning, bookkeeping, and business advice.
Meeting Tax Obligations
Tax accountants are invaluable to the medical profession when it comes to navigating the often-complicated tax rules.
For example, do the personal services income (PSI) rules apply? Or are you treated as a contractor or employee, and what does that mean for your tax responsibilities?
What Is Personal Services Income?
According to the Australian Tax Office (ATO), personal services income (PSI) is income produced principally from an individual’s personal skills, expertise and labour.
While many professionals fall into the personal services income category, the ATO identifies a few common examples, including doctors and other medical professionals.
This is because it’s their skill and expertise that is generating their income, not the sale of goods.
There are a number of rules that apply to individuals who earn a PSI income to avoid having them sidestep their tax obligations by paying less tax and having access to greater tax deductions compared to employees.
The rules and steps can be quite complex when it comes to establishing whether the PSI rules are applicable to you.
So, we’ve drafted a step-for-step guide to help you establish if you earn PSI income or not. But, it’s important that you engage the services of an accountant for doctors to avoid making costly mistakes.
Accounting Services: Tax Planning
Doctors and other medical professionals are among the highest-earning professionals in Australia. And the higher the income, the higher the marginal tax rate.
So, having an effective tax plan can help you minimise your tax obligations.
For example, the Australian Taxation Office (ATO) allows doctors to claim a wide range of tax deductions each year, including travel expenses, medical registrations and motor vehicle expenses.
How you structure your medical career can also be beneficial as part of tax minimisation strategies. For example, if you’re currently operating as a contractor, it may be wise to start operating through a company structure.
However, you can’t set up a company solely for tax minimisation reasons because the ATO may view that as a tax avoidance scheme. So, that’s why it’s important to engage the services of an accountant for doctors to avoid getting into unnecessary hot water.
Medical accounting can also be beneficial when it comes to GST compliance. The way medical practices handle GST has fundamental consequences for how much revenue they’ll generate over time, so it pays to get this right from day one.
Financial Services: Business Advice
Beyond tax preparation and bookkeeping services, specialist accountants who are experts in medical accounting can also provide specialist advice to help you manage and grow your medical practice, which can be an invaluable tool for your business.
At the end of the day, you are running a business. So it’s important to have certain business plans and cash flow strategies in place.
Tips For Choosing an Accountant for Doctors
So now you know why it’s important for doctors to seek the services of an accountant. But how do you go about choosing the best one?
Here are some factors you should consider when choosing the best accountant for doctors:
- Industry-specific experience: the ideal candidate will demonstrate experience of working with medical professionals, including doctors. They should also know and understand the particular complexities surrounding medical accounting within the healthcare industry. Medical expertise can also be advantageous since they would understand what is needed during tax time and how to maximise the relevant tax deductions for doctors.
- Think about your specific needs: Do you need someone to take care of BAS lodgements just to keep track of your accounts or to help you with your financial obligations and financial goals? Some accountants offer all these services in one package while others are specialists in either area. For example, some will only do accounting tasks but not other work like tax returns.
- Communication: a good accountant for doctors will be readily available to answer any of your questions, give you the advice you need and do so in a manner that’s easy to understand.
Beyond these specific considerations for choosing an accountant for doctors, there are various general factors you need to consider when choosing an accountant for your medical practice business.
Make sure to check out our tips on finding an accountant for your small business before committing to a long-term relationship with them.
Why Choose Box Advisory Services?
Box Advisory Services is a full-service accounting firm that specialises in providing accounting services for doctors and medical practices.
Our mission is to help doctors make better decisions regarding business taxes, structure and growth.
By thinking outside of the Box using cloud technology, continuous education of our clients and building a trusting relationship, we believe that we can make accounting simple and easy.
We’re also a team of award-winning Chartered Accounts, so we are well-versed in all aspects of running businesses and have the necessary experience working with doctors, creating customised solutions that match your specific needs.
Davie Mach, Director of Box Advisory Services and recent winner of Australia’s Young Accountant of the Year Award, has placed a major emphasis on creating a new-age accounting agency focused on assisting doctors and other medical practitioners with all aspects of their business.
While your focus may be on treating your patients and providing healthcare to the best of your abilities, it’s important to remember that you’re also running a business.
Besides having tax obligations and financial reporting responsibilities, you want your medical practice business to succeed. So hiring an accountant for doctors can help you meet those responsibilities and set your business up for successful growth.
But you’ll want to engage the services of an accountant who has the relevant knowledge and experience working with clients in the medical field.
Box Advisory Services is a leading accountancy firm that provides accounting services and business advice to medical practitioners. We offer tailored solutions for doctors and other healthcare professionals.
To see how our team of accountants and tax agents can help, book a free consultation with us today.
Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property buyers and investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal, tax or investment advice. You should, where necessary, seek your own advice for any legal, tax or investment issues raised in your affairs.