Young Alpha Omega hosted an event focused on the Business of Dentistry, which took place on Sunday 27th October in Belsize Park.
This was a unique opportunity to gain insights and discover strategies to manage money, get the best out of being an associate or future practice owner and plan for the future.
It was aimed primarily at Dental students young dentists and those who would like clarification about the financial side of the business of dentistry (something not taught in dental schools generally).
Even for those practising for some time, it was an opportunity to consider all the options available including an exit strategy further down the line.
Here is a summary of the meeting:
The Business of Dentistry with Oliver Field – Financial Planner
Tax Considerations: Self-Employed Dentists in their First Year
Structure: Limited Company vs Sole Trader
Experience: Gaining Experience to Find your Niche
Buying a Practice: Financing Options and Long-Term Planning
Spinning Plates: Balancing Career with Personal
Personal Finance: Aligning Financial Strategies with Life Goals for Success
1. Tax Considerations – First Year
Key Issues for First-Year Dentists:
Common concerns: tax filing, self-employment rules, managing accounts.
Advice for new dentists: Avoid penalties by hiring a dental-specialist accountant early.
File tax returns after almost two years (e.g., self-employed June 24, file by Jan 26).
Tax is based on income minus business expenses.
Be mindful of tax brackets (particularly between £100k-£125k).
Set aside about 30% for tax (due to payments on account for the next year).
Keep monthly records, including lab bills and superannuation contributions.
Track other income (e.g., rental, dividends, charity donations).
Keep financial records for at least 6 years.
Tip: Appoint an accountant early to manage accounts and allowable expenses.
2. Company Structure: Ltd vs Sole Trader?
3. Gaining Experience
4. Buying a Practice – 14 Key Considerations
Location – Decide which area(s) of the country you would like to buy in and rank those areas in order of preference. The more flexible you are the more options you will have and the better your negotiating position will be. If you are only looking to buy within 10 miles of your home then you must be determined, have your funding in place and be prepared to pay the asking price or higher as soon as that practice goes to market. Be sure to register with all the brokers
Discretion and confidentiality - I recommend that you do not share your plans with colleagues, staff at the practice you are interested in or the LAT (Local Area Team). Be sure to respect the conditions of any Non-Disclosure Agreement (NDA) you sign with a broker or an individual dentist.
Sole trader or Ltd Company - Dental Businesses are typically set up as a ‘sole trader’ or ‘Incorporated Ltd company’. If you wish to buy a business which is incorporated, then you will be offered the shares in the company or assets. There are advantages and disadvantages from a legal, accounting and tax perspective which you should take advice on.
Dental Partnership - Buying into a partnership can be a good way of getting into business. Partnerships can be expense share or full partnership. Expense share enables you to work alongside your colleagues and simply share common expenses. Full partnership means you really are in business with your colleagues and you all share the responsibilities. It is essential you are comfortable working with your partners from a professional and personal perspective.
Finance - We recommend you work with a specialist healthcare lending team who can consider the entire market to get the best deal for you. Your chances of an offer being accepted will increase if you have already explored your funding options and can demonstrate eligibility for funding.
Leasehold or freehold - Consider if you would like to buy the freehold of the dental practice or if you would prefer to be a leaseholder. Typically, the banks will lend 100% of the Freehold purchase so consider this in your financial forecasting and compare the benefits of ownership to paying rent. Often vendors have a flexible approach to this and are willing to convert a freehold sale to a leasehold sale with rent at market value and the option for you to buy at a later stage. The freehold will be available at the local market rate and subject to a separate independent bank approved valuation. Your funders will likely expect the lease to have a minimum of 10-15 years to run, so always check the length of the lease that is remaining on a property.
NHS Contract - If the practice you want to buy has a NHS contract you will need to adhere to the terms of the existing contract. This will probably include normal surgery hours as well as the allocated number of UDA’s. We recommend you engage a specialist dental lawyer to enable the contracts to be transferred to you and do not speak to the LAT as this may compromise your purchase.
Appoint dental specialist providers – dental solicitor and accountant specialists
Valuation - Review the valuation with your accountant/lender. They will be able to provide some financial modelling which will show you how affordable any given practice is for you. This is a business transaction and you should understand what a business is worth to you and then act accordingly.
Goodwill - Spend some time finding out why patients return to the practice. The Goodwill value reflects the value of those repeat visits. You can discuss this with the vendor at your viewing. In nearly every deal, the purchasing dentist will be concerned that patients will not return once they purchase the practice. We have found no evidence to support these fears, although it is important to put a transition plan in place so that the new dentist(s) can gain the trust of the patients.
Practice viewings - A viewing is a two-way street. Our advice is to treat it like a job interview. Ask questions of the vendor about the business, the clinical procedures, patient base and whatever else is important to you, but remember you are selling yourself too. A vendor is likely to be keen to reassure themselves they can work with you post sale (if applicable) and to know they are leaving their patients in capable hands.
Know your limits - Evaluate your buying power and the profitability of the practice you are interested in. Your lenders will advise you what you have available to invest. Successfully bidding on a practice is not just about ‘the highest bid’. The vendor will also make a decision about you. Vendors often think about the on-going care of their patients once they sell or how they might feel about working with you post sale. The vendor should always get to choose who he / she sells to.
Negotiation - We recommend you do not get into a discussion with the vendor along the lines of ‘how much do they want?’, ‘what is the lowest they will accept?’ as you simply run the risk of making the vendor think you are only looking for a bargain when they absolutely do not want to sell at a bargain price. The risk is the vendor now discounts your interest.
Associates - The vendor may well be willing to stay on and work with you as an associate. This is often seen as a very good thing by your lenders, particularly if you are buying a private practice as the continuity of care is important to maintain the private income. You will need to agree an associate agreement with the vendor so it is good to ask them what their plans and ambitions are once they have sold their business.
5. Spinning Plates: Balancing Career & Personal Life
Work-Life Balance:
Balancing work with personal life (family, friends, personal well-being).
Managing stress and avoiding burnout.
Maintaining meaningful relationships outside of work (family, friendships).
Important questions to ask: Are you living the life you want to show your kids? Are you maintaining relationships?
6. Aligning Personal Finance with Life Goals - Key Financial Strategies:
Forecasting for success through salary + dividend combination.
Regular pension contributions and cash flow forecasting.
Scenario planning and stress testing to prepare for various situations.
Define financial freedom and track progress towards it.
Consider long-term goals, such as the potential sale of the practice.
Ensure personal expenses are part of the planning.
Insurance: Consider income protection, key person insurance, public liability, and relevant life insurance.
Summary:
First-Year Dentists:
Consider tax obligations and hiring a specialist accountant.
Sole Trader vs Ltd Company:
Weigh the pros and cons, particularly regarding liability, tax rates, and scalability.
Experience:
Gaining experience in a practice is essential before starting your own if that’s how you wish to proceed
Buying a Practice:
Focus on key factors like location and financial considerations.
Work-Life Balance:
Managing personal life and avoiding burnout is crucial for long-term success.
Aligning Finances with Goals:
Regularly track and plan personal and business finances to ensure long-term success.
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