Dental Tribune UK Edition, October 4-10, 2010, No.24 Vol.4

page 14DTà M ost dentists are not primarily business people, so it’s not surprising that since the General Dental Council (GDC) altered the regulations to allow dental practices to operate as limited companies from 2006, there has been much speculation and misinformation circulating within the profession about whether to take his step. Limited Liability The use of the word ‘limited’ in the title ‘limited company’ refers to limited liability. While even in these parlous times, few dental practices are in danger of clos- ing, the shareholders in a limit- ed company have the security of knowing that their exposure to liabilities to creditors will never exceed their original share capi- tal, usually between £100 and £1,000. Another advantage of trad- ing as a limited company is the higher level of credibility in many commercial negotiations or inter-business relations ac- corded to a company compared with a sole trader. Selling to a third party It is often easier to transfer the ownership of a practice trading as a limited company. This is be- cause the company remains in existence unless it is dissolved or liquidated. The existing business ar- rangements, bank accounts and supply contracts, for exam- ple, all stay the same under the new ownership, while the new owner of a sole-trader practice would need to re-establish these relationships under his/her own name. This is especially impor- tant with PCT contracts, which should be unaffected, provided the PCT has been properly ap- proached at the time of incorpo- ration and the PCT contract has been transferred into the limited company without restriction. Experience shows that incorpo- rated practices with PCT con- tracts are realising higher sell- ing values than unincorporated practices, partly for this reason. The process of incorporation and the resulting altered tax re- gime enables converting sole traders to use tax savings aris- ing from incorporation to sub- stantially increase their pension contributions without affecting their current quality of life, sub- ject to the new rules on pension contributions for high earners. Tax benefits Other taxation benefits related to the differences between how individuals and companies pay tax and National Insurance de- pend on the individual’s income, which is effectively the prac- tice’s profit in any given year. For example, a sole trad- er making a profit of around £100,000pa, and drawing out of the practice all of the profit, would expect to be about £4,000pa better off after incor- poration, just based on the rate differences alone (09/10 tax tables), before any other plan- ning is done to significantly increase the amount of the total tax savings. Cash-flow benefits Converting to a limited com- pany also has cash-flow ben- efits. Sole traders normally pay tax on their profits (income) in two instalments, with about half becoming due two months be- fore the end of tax year and the other about half payable four months after the end of the tax year. Limited companies of this size do not make payments on account, and their Corporation Tax, as opposed to Income Tax, is not payable until nine months after the end of the tax year. Time to think in incorporation page 15 Business Management Tribune Dr Ishman discusess dento-legal issues Be Protected pages 16-17 Business Management Tribune Understand the power of patient knowl- edge Its all in the mind page 18 Business Management Tribune What’s your dental outlook? The dentist goldmine pages 20-22 Business Management Tribune Jodie Tisson uses the powers of social networking Tweet your way to success Michael Lansdell outlines the advantages of incorporation for an independent practice owned and operated by a dentist or partnership D E N T S P LY AC A D E M Y W E B I N A R P R O G R A M M E Book the best seat. Your own. The DENTSPLY Academy Webinars are the convenient and easy way for you to stay ahead and learn about the latest developments in dentistry. You can even interact ‘live’ with the speakers during the lectures. Plus you get to do it all from the comfort of your own home or practice, you simply need a computer with internet access. There are only 100 places available on each of our online seminars. So hurry and book your place on these popular events. Visit www.dentalwebinars.co.uk to find out more and to book your place. Endodontics Dr Carol Tait Competent cleaning and shaping of the root canal system 19:30, 5th October 2010 Obturation of the cleaned and shaped root canal system 19:30, 2nd November 2010 Periodontics Sarah Murray and Baldeesh Chana Root Surface Debridement 19:30, 27th September 2010 19:30, 8th November 2010 SDR Dr Trevor Bigg Smart Dentine Replacement 19:30, 26 October 2010 19:30, 10 November 2010 WEBINAR PROGRAMMES Business ManageMent triBune Transform your practice into a newly formed company ‘There has been much speculation and misinformation circulating within the profession about whether to take his step.’