If you are considering setting up on your own or are in a medical or dental private practice, there are a number of factors you need to consider than may not be obvious from the outset. In the article below we consider some of the common pitfalls you should look to avoid.
It should go without saying, you should have a business plan. Within your plan it is essential to take both the medium and long term view. Network and be over-alert to new opportunities.
Plan your time too. In business, time is money and speed and service matters to customers/patients. Don’t agree to timescales that ultimately could compromise your work. Even when business is hard to come by, it can be better to politely decline an unrealistic offer than accept a job but fail to deliver – especially if you may have the opportunity to do business with them in the future.
It is essential that you keep up with the times – technology and market developments, and changing in legislation and working practice. Also continue to evolve your skill set; it is after all your own ‘personal currency’. Engaging in continuous professional development is a simple way to improving and upskilling yourself.
The correct business structure will often be self-evident however for many of those starting out in business for the first time there may be a few different options to consider. Self-employment, limited liability partnerships and company structures provide different levels of protection and cost control. The choice will affect how much you can draw from the business and how much tax you will pay. As your business grows, or you work with different types of clients you may decide to change your business structure. Ultimately it is an area upon which you should seek advice.
It may be a requirement for you to set up as a limited company, if so it is essential that you consider and understand the impact of IR35; which put simply is a piece of anti-avoidance legislation that could significantly impact the amount of tax and National Insurance you pay. Again, this is another area where is it essential to seek advice.
Tax – claim and prepare
Unless you choose to work through a limited company, any tax liability you suffer will fall due on 31 January with an advance on the following years’ estimated bill due on 31 July. Ensure you have allocated and put aside a reasonable percentage, 15 or 20% of each payment you receive, to ensure you have enough money to meet such liability.
By the same token, ensure you maximise the tax relief you are entitled, including pension contributions and perhaps even by using proven tax efficient investment planning methods.
There are a number of essential insurances when setting up your own business or going self-employed.
- Business protection and key person assurance is vital, it is a business protecting itself against the financial loss it may suffer as the result of a critical illness, incapacity or death of a key individual.
- Shareholder/Partnership protection, this provides a cash lump sum that can he used to purchase the shares back from the estate allowing the business to continue.
- Key person income protection and critical illness can be set up and is owned, paid for and paid out to the company.
Following the business insurances you need to consider your own personal liabilities – life/health Insurance is key and will provide cover for you and your family in the event that either you or a family member becomes ill and unable to work.