If you are a dentist it is worth finding out the different business structures that you can practice under. A possible route is moving your dental practice to a limited company, or to incorporate a new practice as a limited company.

This would make the company a separate legal structure from the dentist themselves, which can form some protection against uninsured claims or commercial risks. This is because the liabilities of the company would not fall against the dentist. However, it’s important to be aware of the liabilities against the individual. For example, you can be held accountable if you do not comply with your statutory duties. Furthermore, in terms of how you are taxed, a limited company is taxed at corporation tax rates. This is based on the profits of the company and the dentist’s earnings. Earnings will also be taxed through PAYE tax for salary. However, the amount of tax that will be deducted from you can be dependent upon your situation and level of earnings.

Company structure options

If you choose to go down the sole trader route, as a dentist you will trade on your own account. You will be liable for the debts and risks of the practice and this will include any uninsured losses. It is useful to be aware that there is zero protection for the individual dentist from any risks, and he or she will be taxed as an individual with a few regulatory responsibilities.

Another route for your dental practice is through a Partnership.  They generally operate like an expense sharing system, but all the participants have the same involvement in the business or practice. This will include sharing all the information, responsibility and accountability among all the partners.  However, a formal partnership reduces the flexibility of the practitioners. If you wish to leave the partnership, it is much simpler as you can sell your share in the overall business.  In terms of how the tax is set out, a partnership will have had completed a Partnership tax return. Every single partner is liable for their own tax which is determined by their earnings as individuals.

Have you kept a record?

You should always keep records of your business’s income and expenses for your tax return if you choose to be in a Partnership or Sole Trader. Ensure there are records of your personal income and partnership. Having this information makes it easier to work out any profits or losses, and they are on hand if requested by the HMRC.

Knowing how you are taxed is important for everybody, but particularly if you own or are involved in a company. The key is making sure you are compliant with your tax returns. If this is something you would like more information on, please get in touch on 01623 490120 or email iThis email address is being protected from spambots. You need JavaScript enabled to view it..