How should I manage my accounts as a private healthcare clinic?

When operating any type of business ensuring you have reliable and up to date financial information is essential. To assist with keeping on top of your finances, we would recommend that management accounts, budgets and cash flow forecasts are prepared and monitored, this will allow you to identify areas of weakness and any potential upcoming problems.

It is now easier than ever to keep on top of your finances by utilising the latest technology. At Plus Accounting, we recommend xero for your bookkeeping. Whilst the technology makes things easier, we would still recommend hiring a bookkeeper to maintain the records or at least review the records on a monthly basis. Utilising a bookkeeper also helps to ensure you have more time to spend on bringing profits into the clinic.

You could also utilise technology for booking and related CRM systems which could feed into your bookkeeping package to ensure more accurate data is held. Having these types of technologies also helps to keep on top of any trends in your business to help you with future planning and strategy.

When should I invest in new equipment?

When operating a private healthcare clinic planning when to purchase that new piece of equipment is now more important than ever. It could be the equipment to allow you to offer that new service

your customers have been asking about or to upgrade some existing equipment to the latest specifications.

With rising corporation tax and an effective tax rate of 26.5% on profits between £50,001 and £250,000, from April 2023, timing is key to ensure you are maximising the available capital allowances in the correct period.

If the clinic cannot afford the asset, then it could be that purchasing the asset outright does not make financial sense, especially given the increasing cost of financing, for the clinic at the time so an operating lease could be looked into. If you will only be renting the asset with a monthly payment, then the timing is not so important as it would be if purchasing the asset.

Ensuring you have reliable and up to date financial information is key to making any decision in your business and especially so in this case.

Is a limited company the correct structure for my private healthcare clinic?

When thinking about the structure of your private healthcare clinic you will need to consider the following areas:

1. How will I be taxed?

As a sole trader you will pay tax and national insurance on your total profits earned during the tax year.

As a limited company you will pay corporation tax on your profits and then additional tax personally on any monies withdrawn from the company. This will depend on the remuneration strategy you decide to utilise.

If your main reason for incorporation is to save tax it is always best to undertake a calculation to understand the difference in taxes before making a final decision.

2. Will I benefit from limited liability?

As a company the liability of any losses or debts incurred by the business is limited to the business, however with as a sole trader you are responsible for these losses or debts personally which could put your personal assets at risk.

The limited liability could also benefit you should the unfortunate event of someone making a claim against the clinic occur.

3. Will it help me with an exit?

Operating under a limited company model could help when you decide it’s time to retire or cease the business. You could choose to sell the shares in the company or you could sell the trade of the company and leave the funds in the company to invest in a potentially more tax efficient manner.

Where should I run my private healthcare clinic from?

You may be operating a clinic from a spare room in your home or from other rented or owned premises. Making sure you have the correct type and size of premises is vital to ensuring you have the correct cost base aligned with the income and future plans of the clinic.

If you currently operate from a spare room, then moving out to a rented premises will represent a significant increase in costs. You should ensure the clinic has the available profits and cashflow to make the move. You will have multiple options when renting a premises from a large, serviced building to taking on a whole premises and you should take time to decide what option works best for your business.

If you decide the best option is to purchase a property to operate the clinic from then there are multiple areas to consider. The main one being how you will purchase the property. You could purchase it privately and rent it to the trading limited company, purchase it through the trading limited company, purchase it through a separate limited company to keep it separate from the trade or purchase through a pension fund. All these areas require careful consideration and professional advice should be sort when making this decision.

Author: Patrick Hoare, Corporate Services Manager, Plus Accounting

Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site

Date published: 26 April 2023

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