This article is written by April Han. She is a multi-passionate entrepreneur. With a formal education in Business Administration and years of working with healthcare startups under her belt, she is able to provide valuable advice to aspiring locums in terms of creativity, innovation, and discovery of solutions to the challenges amid our society’s growing demand for health services. A life-long learner with a growth mindset, she is currently expanding her knowledge of the healthcare marketplace through online courses and hands-on training from world-class mentors.
Better income is one of the many advantages of working as a locum doctor. It, however, won’t make much of a difference without smart money management. Your tax and pension contributions are deducted from your salary if you’re in a permanent GP post. You have to know that when starting locum work, you will be managing your own invoices and other financial matters.
So, unless you hire your own accountant, you need to know these important steps to reducing your locum GP expenses:
1. Register as a limited company rather than a sole trader.
One of the most common questions first-time locum GPs have is whether they should set themselves up as a sole trader of a limited company. The quick answer: register as a limited company.
A limited company has its own legal identity. Its debts won’t become your personal debts. If you set yourself up as a sole trader, you’re not fully protected. Your properties, such as your house or your car, may be seized by the bank if you’re not able to pay your loans. Additionally, a limited company will help reduce tax bills and insurance contributions.
For more information on reducing your tax bills, read this article.
2. Pay your taxes on time.
A late payment of taxes often has its corresponding penalty. In Singapore, you have 30 days from the date of the Notice of Assessment (NOA) to pay your taxes. Failure to do so will lead to a penalty that requires a payment of 5% of your total tax amount and an additional 1% on the unpaid tax.
You will be sent a Demand Note showing the unpaid tax and penalty once the said 5% penalty has been imposed. If the 5% penalty is still not paid after 60 days, an additional 1% penalty may be imposed.
To avoid these additional expenses, make sure that your taxes are paid on time. The tax year in Singapore is the normal calendar year (January 1 – December 31). You need to file your personal tax returns on or before April 15. Companies can decide their financial year, but filing for corporate tax returns should be done on or before November 30. Taxes should be paid in the preceding year.
3. Keep your records organized.
It is necessary to keep all record of income, expenses, invoice, and receipts. You will need them when you submit your tax returns. If the Inland Revenue Authority of Singapore (IRAS) conducts an investigation on your tax returns, you will need to provide proof of your income and expenses.
You may use financial management systems or use a simple spreadsheet to organize your income and expense details. Just make sure you keep all copies of invoices and receipts. It may also help to use a credit card when paying for business costs. This way, you can use your monthly statements as proof of expense.
Continuing your career as a locum offers flexibility, freedom, and control over your work-life balance. Click below to register as a locum GP or call us at 6258 6683 for any enquiries.
4. Never forget to have a record of these expenses.
There are certain expenses that most locum GPs forget are tax deductible. These are:
- Transportation – Driving from your place to a hospital or from hospital to hospital is very expensive considering high fuel costs. You also have to consider the wear and tear on your vehicle. Luckily, there are two ways you can cover your transportation expenses.
You can have a single vehicle used for business purposes only. You can claim this on your expenditure list. You can’t, however, do this if you use the car for both personal and business trips. You then have to use the standard mileage rate system. Record the miles you travel for work then apply the cost per mile rate and deduct it from your tax.
- Home Office – Setting up a home office is necessary to keep your freelance work harmonious. This is where you can keep all your records, make arrangements with employers/clients, filing reports, and performing other general admin tasks. You can claim this as tax deduction using insurance, rent or mortgage, and utility rates.
- Insurance – Since you are no longer tied to a hospital, you must have your own insurance that will protect you against financial loss. You can include this in your expenses list.
- Training and Continuing Education – To remain knowledgeable, relevant, and efficient in your field you need to keep yourself educated by attending training, seminars, and short courses. The medical field constantly comes up with new techniques. Those in permanent positions have access to training, but you can also take advantage of them if you’re committed to professional development. You can claim the costs of training and education and add it to your expenditure list.
You most probably decided to do locum work in order to have better income. Now that you have the freedom to manage your own finances, it’s important to know how to reduce locum GP expenses so you can reap the benefits of your hard work. Follow the above tips and keep checking our blog for more tips for locum GPs.
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