It’s not uncommon for doctors in private practice, especially those who are new to running a business, to run into financial problems. Sandison Easson's Partner, Ian Tongue, picks out some key areas to be aware of and shows how to stay out of trouble.
With the busy demands of a consultant carrying out private work, it is easy to encounter financial pitfalls that can result in significant financial pressure or loss.
Let's look at some of the more common areas to focus on to avoid a potentially costly mistake.
Running a business
One of the most common problem areas is not treating your private practice as a business.
It may sound simple, but the career path towards carrying out private work rarely sees you paid outside of the PAYE system.
Therefore, patients and insurers paying you without tax deducted – and robust chasing systems when they don’t pay or part pay – are essential to ensure that you are not working for free.
All private practices are required to maintain adequate accounting records and, as a minimum, this should enable you to understand the financial position of the practice at any time.
Records of work undertaken together with details of when payment was received are the absolute minimum required.
Likewise, expenses need to be meticulously recorded to ensure all your spending is included thereby minimising your tax liability.
Where payment is not received, systems to investigate and chase this money are required to avoid financial loss.
It is surprising how many consultants write off debts because they left things too long and didn’t deal with things at the time.