August 2019
Finance structuring may not be top of mind when it comes to maximising your practice efficiency however beneficial finance options can provide efficiencies not only for your practice but also your personal finances.
Once recommendations have been provided by your accountant and clarity is achieved around the type of ownership entity to be established or to be joined, it is at this point (with plenty of documents in tow) that bank approval in principle for the funding can be arranged.
Let’s look at a practice buy-in scenario and how some thought to the structure can potentially be of benefit.
Practice Buy-in
Cutcher & Neale Finance can procure finance from specialised lenders that can provide options to borrow up to 100% of the practice purchase price or 100% of the share you are acquiring.
These specialised funders can provide quick turnarounds albeit with higher interest rates, and shorter loan terms.
Alternatively, your personal financial situation may provide scope to achieve accelerated reduction of your non-deductible (bad) debt and the ability to maintain deductible (good) debt for longer periods.
As an example, could part of the cashflow required to payoff the practice finance over a ten or fifteen year period be reallocated to payoff your residential home loan faster, allowing the practice finance to provide deductible benefit over a longer period? The answer lies in the equity you currently hold in your residential property.
Provided you do have available equity in your property, it is possible to carve out a separate loan account against your residence at home loan interest rates which can be specifically tailored for your practice funding requirement.
This includes a clear line of sight for your accountant for tax and deductibility purposes.
Recent example of a practice buy-in using a residential property valued at $1,200,000
This rapid repayment of non-deductible debt, while still repaying deductible debt over a longer period can provide you with immediate fiscal benefits and provide a lot of flexibility for the future.
However, care must be taken when mixing private assets and practice assets for loan security.
If you feel that you could be doing more to maximise your practice efficiency contact one of our trusted professionals for advice and assistance at cnmail@cutcher.com.au or (02) 4928 8500.
Topics: Accounting, Employees, medical accounting, doctor, medicalpractice
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Australia