Medical Centre Corporate Structuring:

When establishing any business, it is important to ensure that you select a structure that is compatible with your objectives and one that will be the most effective in achieving wealth generation, asset protection and future flexibility.  This is especially important in the medical industry, where there is substantial risk in the services provided to clients and the fiduciary obligations assumed by medical professionals.

Wealth generation requires a maximisation of cashflow into the business, a minimisation of taxation liabilities, and attaining minimum overheads.  Two relevant considerations will be the number of medical professionals who will be seeing patients at your medical centre and the number of daily appointments available. These two factors will influence the business’ outgoings for the doctor’s wages or fees and the likely Medicare contribution received.

Asset protection involves seeking to reduce your personal liability in the event your medical centre fails to satisfy its creditors or is at risk of legal proceedings being brought against it.  It is important to protect your assets from the outset because a reorganisation of your assets such as a transfer in ownership could be prevented or reversed if undertaken at a time of legal exposure or debts.

Flexibility is also important because you should ensure that your structure will be capable of adapting to changes in the medical industry, allows for future expansion and can be varied if necessary to ensure you are best placed to achieve your objectives. This may include making provision for changes to the stakeholders in the business and financial injections into the business.

Corporate structuring may include registering your centre as a company, which is an entity that can be sued in its own right and can be sued. A company is a distinct corporate entity, separate from its shareholders and directors. All contracts, including leases, licences, employment contracts and service agreements will be in the name of the company. To establish a company, it must be registered with ASIC. A company will also endure other obligations imposed by law, including ongoing financial reporting, notification of changes to members, and prescribing statutory duties to be met by directors.

The medical centre may also be set up as a trust. This allows the trust to hold assets on behalf of its beneficiaries, which may be family members or the practice owners. It is common for a trust to be utilised only for the employment of non-medical staff such as those that perform administrative services and the balance of the business to be established as a company which will hire the medical professionals.

A medical centre may also be structured as a partnership or sole trader, however, due to the risk associated with operating in the medical sector, and the limited asset protection afforded by these options, they are not often utilised and may be against legal recommendations.

If you are considering establishing a medical centre, or are looking to invest or purchase a medical centre, we recommend that you seek legal advice to ensure the best corporate structuring is adopted, to minimise risk and maximise your commercial potential.

If you wish to speak to one of our Medical Centres & Disputes Lawyers, please contact our firm by telephone on (02) 9233 4048 or send an email to info@navado.com.au. 

This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.