GP & Medical Practice – Road to Financial Freedom
When it comes to financial planning for GP, we have not yet seen any advisors who have recommended a GP set up their own medical practice but are trying to sell commission-based products. This is an unbelievable omission!
It is the best investment return and rewarding financial journey. Whether you start from scratch or buy, an established medical practice does not matter.
Pros and Cons – Starting from scratch is definitely time-consuming, not to mention finding a site and piles of documents to be completed. In terms of the design and layout of the Practice, it fits your needs and maximises the space of the practice in the best possible way. The latter comes with a heftier price tag but is less stressful and time-consuming. Ideally, you work in the practice for a few months if the right fit for you, namely people, workplace culture and patient base. We always can assist you with a valuation of Goodwill of a Practice.
With the Valuation of Goodwill of a Practice, we base it on Passive Income of the Practice, namely Service Fee from Independent Associate Doctors, Pathology Rent and Allied Health – excluding Principal Doctors fee. We have seen some exorbitant Goodwill valuation by Accountants that incorrectly includes the Principal Doctors Fee!
You shall never worry about patient numbers, in less than a year, and will almost certainly always be busy and have a never-ending stream of patients
In their books, The Cashflow Quadrant – Rich Dad’s Guide to Financial Freedom (1999) by Robert Kiyosaki and Sharon Lechter and The E Myth Revisited (1995) by Michael Gerber, it emphasises the importance to have Portfolio Investment (business income) and not working in the business system.
In a nutshell, to run a “profitable business” practice, you must engage as many as possible Independent Associated Doctors, Practice Nurses, Allied Health and Pathology at the practice. Service fees from the Independent Associated Doctors and income from the Practice Nurses, Allied-Health and Pathology are business income for tax purposes according to ATO IT2639 Para 8 – you can legally stream this income to a lower tax bracket family member or a bucket company.
