Figurit’s Michael Lansdell considers the benefits – and risks – of working with family members
Is your partner, spouse or child working in the practice? Utilising the talents of family members, and giving them the opportunity to develop transferable skills, can mean financial benefits to your business in the form of tax savings. But there are risks, too.
Always apply the same principles when employing a family member in the dental practice that you would to anyone else, which means full compliance with all tax and employment laws. This includes having a contract in place or being able to show an exchange of letters, if asked.
This should lay out what services will be provided and what you will be paying them. You must pay above the national minimum wage (NMW), but their wages must not be excessive. Also, you must be able to show that the expense is “wholly and exclusively for the purpose of the business”. When claiming a tax deduction, this point is crucial.
Efficient record keeping is the hallmark of every successful and smooth-running business and this is the perfect example of where your processes must not let you down. You must be able to present the correct paperwork to HMRC, and now is a good time to audit your record-keeping protocols to see if they need to be improved.
Why not move to Cloud-based systems for key practice management processes, such as payroll? These platforms ensure that data relating to salaries, wages and all business expenses are not only easily retrievable by multiple enabled users, but also makes it easier to keep all information up-to-date.
Appropriate renumeration, good record keeping and evidence of actual employment and of wages being paid – tick all these boxes and you should be OK but don’t leave anything to chance. Give us a call at Figurit.
We are specialist dental accountants with experience and knowledge to keep you compliant with HMRC and to help you be more tax efficient. We can also help to support you incorporate more Cloud-based working into your business processes.
As we hopefully enter a more settled time, dental practice owners will be looking for opportunities to maximise their returns. We will help you explore ideas you might not have considered, while ensuring you remain on the right side of the law.
For more information, visit https://figurit.com or call 020 7376 9333.