Why doctors need to keep their financial affairs simple…or outsource them
Most medical specialists and surgeons have very little spare time, and any time not spent on generating income has a very high opportunity cost. Your time is best allocated to working on your practice and seeing patients.
To save time, it therefore makes a lot of sense to streamline your finances and avoid complexity where possible. However, in many circumstances, complex structures can save you a great amount of tax.
Let’s look at the 3 most common structures that can benefit doctors.
Self Managed Super Funds can be very time-intensive to manage and are subject to strict rules and regulations. However, the financial benefits can be substantial, as they can enable you to buy your own rooms, including with borrowing. Depending on the size of your super benefits, you may also be able to save on fees and costs with your own super fund.
Family trusts offer asset protection and also tax minimisation through income splitting. Let’s assume you have a trust that owns a rental property, shares and term deposits. Every year you can decide which beneficiaries this income gets allocated to, enabling you to minimise tax.
Service entity – It may be beneficial to run your practice through a service entity, which employs all the administration staff (non-practitioners), purchases and operates all the equipment, leases the premises and so on. The medical specialist is charged a fee (including a mark-up) by the service entity for the use of those services. Often, this will result in a small profit being earned by the service entity, which can then be split with related parties (e.g. Spouse) and related entities (i.e. Trusts and Companies) to minimise tax.
Outsourcing to save time and money If you are a doctor in private practice, you should outsource the management of your financial affairs to a Specialist Adviser like myself. This will not only save you time and thus money, but I will also actively seek out planning and wealth creation opportunities, and identify risks that need to be managed.
I specialise in managing and coordinating the financial affairs of medical professionals in private practice and have been recognised as one of the best financial planners in Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.
As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.
My first consultation is free. I allocate up to 90 minutes to discuss your personal circumstances and to establish how I may best assist you. Where you already have an existing adviser, I would be happy to offer a second opinion. I always quote a fixed dollar fee before we start working together.
Please contact me on yves@affluenceprivate.com.au or call me direct on 08 9381 2704. You can follow me on Twitter @YvesSchoof or connect with me on Linkedin to receive new articles.
Disclaimer: Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.
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