Transitioning Into a Practice
Updated: 8 minutes ago
Medical school prepares you to save lives, not to run a practice. Yet whether you like it or not, if you're in the medical profession, you are a practice owner. You have turnover, staff, payroll, COIDA obligations, and endless admin. The time for hiding from this reality is long gone.
Choosing the Right Practice Structure
Sole Proprietor: Easy to start, but offers no asset protection and no ability to split income. All earnings are lumped together on your personal tax return, potentially pushing you into a 45% tax rate. There's a place for this structure early on, but once turnover exceeds R2.3 million, it's time to move on.
Partnership: Cost-effective with shared expenses, but like a marriage—it can be bliss or hell depending on your partner. You still have no asset protection, and your personal assets are at risk due to your partner's problems, too.
Incorporated (Our Recommendation): More work upfront, but your assets can be protected, you can scale and build a sellable brand, and you gain access to advanced tax planning strategies that can significantly reduce your effective tax rate.
SARS Is Watching
The days of hiding from SARS are over. With AI capabilities, they can now process your bank data and identify discrepancies that trigger audits. The best tax planning starts with compliance—stay within the law, because you will pay the price eventually.
Understanding Your Financial Reports
As a practice owner, you need to review your profit and loss statement and balance sheet monthly with your accountant. One critical warning: if your loan account shows a debit balance (meaning you owe your own business money), address it immediately; this can trigger significant tax consequences.
