Every situation is different, but some general rules can help make this relationship function smoothly and profitably.
Navigating the intricacies of tax and financial planning as a medical professional can be a daunting task.
But don’t stress!
With the right strategies and a collaborative approach with your advisers, you can streamline the process and ensure you’re making the most out of your time and income.
Organise your financial records
Keeping your financial records well organised and up to date is a great first step to having a stress-free tax year. This includes things like income statements, expenses, receipts and any other relevant financial documents. Your tax accountant can provide you with a list of things that you should be keeping filed away progressively throughout the year.
Having the correct documents organised and easily accessible will make your life easier and help your tax accountant work more efficiently. Accountants typically bill on an hourly basis, so if you are organised, you could save time and therefore money on your tax bill.
There are certain apps and software available that make digitising and organising your documents a breeze, keeping them accessible when you need them. Have a chat with your accountant for their top recommendations.
Clearly communicating your financial goals, concerns and any changes in your medical practice that may affect your tax situation is key to allowing your accountant to do their job properly.
Being up front and honest about your income, expenses and spending habits is the best way to keep your tax and financial strategy on track and working effectively for you.
Use tax deductions
Familiarise yourself with tax deductions and credits that are specific to medical professionals, such as for continuing education, medical equipment, or home office expenses.
There are specialised accountants and financial planners for medical professionals (such as those at DPM) who focus on dealing with doctors specifically, who will ensure you’re claiming all the correct tax deductions and benefits that you’re eligible for.
Keep in mind that as your career progresses, so will your tax and financial needs, so it’s handy to work with specialists who will keep you updated with the options available for your current situation.
Stay informed about tax laws
Keep up to date with changes that may affect practitioners. Your tax accountant can help with this, but having a basic understanding will enable more meaningful discussions.
Your accountant will of course be more than happy to keep you in the know about tax compliance and any regulation changes, but keeping yourself educated is a great way to ensure that you’re working and communicating with your tax accountant in the most effective way possible.
Discuss your business structure
Consult with your tax accountant about the most advantageous business structure for your GP practice. Different structures have varying tax implications. If you own and run a private practice then there are a lot of different options you have when it comes to the financial structure. But most importantly, what is right for one clinic may not be right for you and so working with your accountant to find the best solution for your individual situation is key.
Review your tax return thoroughly
Take the time to review your tax return carefully before filing. Ensure that all information is accurate and up to date, and ask your accountant about any items you don’t understand. This ties back to the benefits of having a good understanding yourself of your own tax situation and needs. While your accountant will be effective at planning for your situation, if something has changed and you haven’t notified them, your filing may need to be updated.
File on time
This one is fairly easy to understand, often quite hard in practice!
To avoid last-minute stress and potential penalties, make sure that you provide all necessary documents and information to your accountant well in advance of filing deadlines. You don’t need the headache that comes with worrying that you’re going to get in trouble with the ATO.
Get things submitted early, you’ll be much more at peace!
Plan for the future
Work with your tax accountant to develop a long-term tax strategy. This can include planning for major expenses, retirement, and other financial goals. Things such as buying a home or an investment property, having children and putting them through private education are things that need to be financially planned and accounted for, and getting ahead of things early is key to success.
Your accountant can advise you on the different strategies you can implement to prepare for your future goals. Ideally, if they’re doing their job well, your accountant could be helping you with your finances for many years to come, so keeping them in the loop can benefit your partnership.
This last one is simple and maybe a bit obvious, but don’t hesitate to ask questions.
Ask about your financial situation, tax implications, strategies you can implement, anything. They’re there to help and advise you on your situation and are on hand to make sure you understand everything clearly and are happy with your plan. Honestly, there are no silly questions. Tax is a complex and broad subject so ask whatever it takes to make you feel content and up to speed with your plan.
Robert Giblin is a Chartered Accountant and Registered Tax Agent who specialises in tax compliance, structuring, wealth creation and risk management for medical professionals.
For more information on accounting for GPs, find articles and podcasts at the DPM Knowledge Centre.