Taking up an associate position can offer many rewards and benefits for ambitious dentists. As well as providing a welcome boost in income, working as an associate allows you to hone your dental skills and forge stronger relationships with patients. But these additional responsibilities can also be overwhelming and many associates struggle with the financial transition of becoming self-employed, particularly when it comes to planning and managing their tax obligations.
The 31st January and 31st July self-assessment tax payment deadlines can cause sleepless nights for dentists who are concerned about the impact this will place on their cash flow and ability to fulfil future payments to avoid financial penalties.
John Clarke, Head of Business Development at Wesleyan Bank, highlights the following top five tips that dental associates should consider to potentially ease their financial pressures.
Notify HMRC
It is your responsibility to notify HMRC when you become self-employed and thereafter to manage your finances by paying your tax bills, on time and in full. In the event of you struggling to make a payment deadline, contact HMRC in plenty of time to discuss the potential options. However, be prepared to answer questions about your finances and what alternative sources of funding you have considered.
Get your records in order
Maintaining up-to-date and well-organised financial records will make tax planning much easier. Keep a file of invoices, bills and receipts for business expenditure in sequential order so they are easily accessible alongside your payslips, P45 and P60 forms, so it will be quicker for you to file your tax returns. Consider setting up separate business and tax saving bank accounts so you can set aside sufficient funds by transferring money from your private account to cover your liabilities.
Seek guidance from trusted experts
Appoint a specialist accountant to assist you in all aspects of your financial affairs. Some experienced and trusted experts operate solely within the dental sector and possess an intrinsic understanding of the financial challenges that dentists face and keep abreast with key market developments. They will ensure you are prepared well in advance for future liabilities and are best placed to advise on how you can offset taxable income with business-related expenditure.
Spread the cost
Alternative finance providers offer funding for tax bills and other short-term working capital solutions to enable dentists to preserve cash flow without compromising their existing banking lines. Unsecured loan facilities allow you to spread the cost of tax liabilities in a flexible and affordable way over a term of six or 12 months.
Specialist dental finance providers also offer step-by-step support to assist dental associates to take the next steps in their careers. Tailored solutions include long-term loans for acquiring a dental practice in addition to partner buy-in/outs and commercial mortgages.
Save time, apply online
Did you know that you can easily apply online for tax funding 24/7? Self-service digital services, such as Wesleyan Bank’s Tax Portal, allows busy dentists to obtain a quote in minutes for paying their tax facility over 6 or 12 monthly instalments. Once approved, the proceeds of the loan can be paid either directly to you or to HMRC for further convenience.
Stringent financial planning may seem like an unnecessary chore initially for dental associates. However, by putting off planning around tax many then struggle to find the cash to meet their liabilities on time. Specialist accountants and dental-specific financial providers are on hand to give far reaching advice, allowing dentists to focus on fulfilling their career aspirations without having to look over their shoulders.
