Sole Trader vs Limited Company: Which One Should You Be?

Sole Trader vs Limited Company: Which One Should You Be?

Author: Joshua Danton Boyd – Crunch Accounting

It’s clear the life of a locum doctor can be stressful and time-consuming. It’s no surprise then when it comes to getting paid many will take the simpler choice. While ease may rank highly, in the end, you want to be doing things in the most fiscally efficient way possible. NHS and locum agencies may be simple, but they can also bring your income down.

The next simplest choice is to become a sole trader. In other words, you become self-employed. This is a fairly easy process and pretty much means you become responsible for receiving your wages and ensuring you pay the correct tax on it all. That’s done with a yearly Self-Assessment and can be fairly straightforward if you keep on top of your papers and accounts over the year.

An added benefit though is the ability to claim expenses against the tax you pay. This can include things like travel and equipment costs. While it does make doing your accounts a slight more complicated, it could end up saving you a fair bit of cash too.

Another option is to form your own Limited Company. This, depending on your situation, can have even more benefits. First of all, you can of course claim business costs to bring your tax down which is always handy. After that, things get a little bit more complicated.

A Limited Company is often the most tax efficient way to pay yourself. This is done by giving yourself a set salary equal to the national minimum wage. This brings down the level of income tax that you pay. To top that up, you then pay yourself in dividends which are taxed at a lower rate. This can lead to massive savings.

For example, if you had an income of £40,000, by forming a Limited Company you could be saving yourself well over £2,000 a year. That’s also without including any expenses that you could further claim to bring that number up. The more you earn, the more going incorporated will get you.

A Limited Company does mean more work though and is certainly a more tricky method than being a sole trader. The simple way to think that though is to hire yourself an accountant. In most cases the savings you’ll be making will easily cover the accounting fees with plenty left over.

They’ll take on all the hard work, and with someone like us at Crunch, it’ll just be a matter of using a simple piece of software. We even do the whole process from scratch starting with your incorporation as a limited company!

So, it’s certainly worth looking into if you haven’t already. There’s a lot of money to be saved if you’re willing to make a change.

Visit Crunch now to find out about their services

NHS Superannuation Changes – NHS pension scheme

Posted to GPnetworks by a locum GP

It seems that with the final dismantling of pcts, the mechanism for
involvement in the NHS pension scheme will change for GP locums from next
April.
Currently, we pay the tiered employee contribution and the pct adds the
employer contribution.
The government proposal is that the employing practices will now be
responsible for the latter. The money for this will be added to the global
sum.

I am worried that practices will not be keen on this and won't like the
extra cost/administration involved.This may be a big cost for practices who
use locums a lot. It may be difficult for locums to remain competitive and
remain in pension scheme.

I am interested what other colleagues think...

NHS Superannuation Changes – NHS pension scheme

Posted to GPnetworks by a locum GP

It seems that with the final dismantling of pcts, the mechanism for
involvement in the NHS pension scheme will change for GP locums from next
April.
Currently, we pay the tiered employee contribution and the pct adds the
employer contribution.
The government proposal is that the employing practices will now be
responsible for the latter. The money for this will be added to the global
sum.

I am worried that practices will not be keen on this and won't like the
extra cost/administration involved.This may be a big cost for practices who
use locums a lot. It may be difficult for locums to remain competitive and
remain in pension scheme.

I am interested what other colleagues think...

Working in partnership for better business and health outcomes

Date: Thursday 17 November 2011
Location: Victory Services Club, London
Event organised by: PCC (www.pcc.nhs.uk)
Cost: FREE

Summary:
GPnetworks has been offered 30 free places at the event (normal price £195), available to our practice members, on a first-come-first-served basis. Email admin@gpnetworks.co.uk if you wish to attend and we will send you a registration code that will allow free registration.

Event description:
With practice mergers increasing and increasing pressure on practices to think and behave collectively in the transition to CCGs, practice managers and partners need to be aware of the consequences of change. This event looks in detail at the benefits and pitfalls of working in partnership whether through merger or federation with other providers or less formal routes.

One session looks at the business considerations of practice mergers and splits, and the potential consequences of incorporation. What are the financial consequences for a high-performing practice of merging with an average achiever? What non-financial factors do practices need to consider before merging – eg population profile and performance against patient survey indicators? What are the risks if it goes wrong?

Other sessions look at:

• How to federate and the benefits of federation, including group purchasing
• Working with patient reference groups, particularly in light of the PP DES
• Working with community pharmacy to reduce costs and improve service deliverables
• A pilot scheme to increase choice and reduce the cost of online procurement designed with and aimed at practice managers

The event also covers real-life examples of federation, considering how the risks can be mitigated and the benefits optimised for the benefit of all stakeholders from purchasing to patient participation.

The new patient participation DES makes explicit the link between more effective patient representation and practice income, but the connection needs to be hard-wired to the strategy. If the needs of patients are not permanently aligned with business development plans, your aspirations to grow the business and better serve the local population could be compromised.

PCC event info and registration here

To register for free, contact admin@gpnetworks.co.uk for an event registration code

Delegates attending: GPs, practice managers, other practice staff and PCT primary care leads.

How can GPnetworks be improved in 2011?

This discussion is a sibling to an earlier discussion about the development of a specific feature inside GPaccounts.

The ideas raised in that earlier discussion are:

  • Allow a ‘switch’ within the GP Surgery screen to control if Practices can see a GPs availability outside their Work Radius (but do not show Practices how far a GP is from their location).
  • Add an attribute to Practice accounts: Parking space available? [yes | no]
  • Bring back the multiple session Requesting/booking feature for Practices (this was removed because it was under used)
  • Re-order the Inbox to show non-confirmed items before confirmed items
  • Send reminders to GPs for Confirmed sessions the day before the session
  • Enriched doctor profiles – to include: GPs Ts&Cs, GPs interpretation of the 4 sessions and GP details of willingness to travel related to work details.

Please give us your thoughts and ideas below.. They will form the basis of the next release of the GPnetworks system.