Running any business requires you to keep proper accounting records for both the taxman and to understand your finances. Ian Tongue sets out some best practice advice for doctors starting out on the private practice journey.
As your private practice grows, the accounting needs will inevitably change, so it’s always best to set things up properly from the start, as it will be more difficult to make changes later on.
The tax system
The tax system for both individuals and companies is on a self-assessment basis. As the name suggests, you are reporting the figures to HM Revenue and Customs (HMRC) and these are used to calculate your tax and National Insurance payments due.
Of course, the nature of the system inevitably lends itself to misreporting due to error, which is why a robust accounting system is essential for your private practice.
HMRC polices self-assessment through the inquiry system, and not maintaining an adequate system can lead to fines, as well as the penalties and interest due for under- or over-declaring your figures.
As a minimum, you should maintain a register of work undertaken, which should include the following:
Date work carried out;
It is best practice for invoices to be issued for self-paying patients and medico-legal work, but, for insured patients, you will often receive just a remittance statement, so make sure these are retained.
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