As a medical practitioner managing a private practice, entrusting your financial well-being to a trusted accountant is paramount. Your financial objectives may range from optimizing tax planning and reducing administrative burdens to personal financial planning.
In this article, we’ll delve into what medical practices should expect from their accountants to ensure financial success and peace of mind.
1. Setting up Your Medical Practice
The initial setup of your practice is a crucial stage, and you should expect your accountant to provide guidance on essential aspects. Questions regarding the type of entity to establish, tax planning opportunities for both your business and personal finances, and best practices should be addressed. This proactive approach ensures that you commence your practice with an optimal setup.
2. Personalized Financial Advice
Medical practitioners often lead busy lives, yet they seek more than a mere number-cruncher in their accountant. They desire a financial advisor who is not just available but also financially savvy. The focus is on holistic advice that extends beyond the practice and considers family circumstances. Regular, preferably in-person, meetings foster a strong connection and understanding between the accountant and the client, resulting in a collaborative and synergistic relationship.
3. Insurance and Retirement Guidance
Insurance plays a pivotal role in the medical field, with risks like malpractice and professional indemnity being significant concerns. Furthermore, as a self-employed practitioner, you may face financial risks in the event of incapacitation. Adequate insurance coverage, including life, dread disease, and disability policies, is essential. For those in partnerships, buy-and-sell agreements and key person coverage are critical aspects to address.
Effective retirement planning is also key. While accountants may not provide specialized financial planning advice, they should ask the right questions to ensure their clients have retirement plans in place.
4. Cash Flow Planning, Financial Reporting, and Tax Optimization
Cash flow planning, financial reporting, and tax optimization are closely interconnected and indispensable for medical practices:
- Cash Flow Planning: Your accountant should assist in managing your practice’s cash flow, optimizing investments, and ensuring that excess funds are utilized to maximize returns while mitigating risk. Effective cash flow planning ensures that you can meet financial obligations like salaries, expenses, and tax payments as they arise.
- Financial Reporting: Regular financial reporting empowers practitioners to gauge their practice’s performance and financial strength at any given time. It provides essential insights for informed decision-making.
- Tax Optimization: Tax planning is a critical aspect of financial management. A skilled accountant will help structure your business and financial affairs to optimize tax efficiency and maximize returns. This includes advice on car ownership, fringe benefits, travel allowances, and remuneration strategies. Given that medical practitioners often fall into the high net worth category, a proficient accountant will continually seek out available tax opportunities to benefit their client.
5. Customized Expectations and Working Relationships
Every medical practitioner’s circumstances and needs are unique. Setting clear expectations and fostering effective working relationships from the outset is essential. This tailored approach allows for optimal results and ensures that your accountant addresses your specific financial goals and challenges.
When entrusting your financial well-being to an accountant as a medical practitioner, you should have high expectations. These expectations include comprehensive financial guidance, personalized advice, assistance in insurance and retirement planning, effective cash flow management, transparent financial reporting, and proactive tax optimization.
By partnering with an accountant who meets these expectations, you can navigate the financial complexities of your practice with confidence and success.