Choosing between being a self-employed dental associate or an employed dental associate involves considering several factors that align with your career goals, work preferences, financial aspirations, and personal circumstances. Here’s a guide to help you make an informed decision, There are differences regarding tax, and I have put some simple details at the end of this article. You must seek professional qualified accountant and tax advice as you consider your options between being self- employed and employed. Other Professional that it is wise to seek qualified professional advice from is and HR lawyer, and Independent Financial adviser (IFA) and always get your contract professionally reviewed before signing.
Self-Employed Dental Associate:
Pros:
Autonomy: You have more control over your schedule, patient care, and treatment decisions compared to being an employee.
Income Potential: Self-employed associates often have the potential to earn a higher income based on the number of patients they treat and the procedures they perform.
Flexibility: You can set your own hours and possibly tailor your practice to specific patient needs or treatment areas of interest. These will need to be discussed at the beginning of the arrangement and at regular points throughout the arrangement.
Take home pay: Because you are personally responsible for making provisions for holidays, sickness, pensions, tax etc, your take home pay with likely be higher than if you are employed.
Business Opportunities: This path can open the door to potential future practice ownership or partnership.
Choice: You can purchase your own materials and equipment, so use what you think is best.
Variety: You can have more than one customer (practice or principal) which means that you can work in different practices.
Subcontracting: You can, at your own expense, hire other people to help you or to do the work for you, this could include hygienists, therapists, patient care coordinators etc to free up your clinical time to do tasks of higher value that you are uniquely qualified to do.
CPD: You can choose what courses you attend, to develop your own career pathway.
Staff: You can hire your own staff. If you don’t like book-keeping, invoicing, letters, following up referrals etc, you can engage someone to do this on your behalf, the practice may be happy to subcontract the practice manager to do tasks that are related to you as a self-employed contractor. If you have had a nurse that you work well with you an employ them to work with you. These are things that you can discuss as part of your remuneration package and what is and is not Included.
Cons:
Business Responsibilities: As a self-employed associate, you’d need to manage your own personal administrative tasks, patient scheduling, billing, and potentially marketing.
Financial Risk: There is no job security, provision for sickness, holiday, pensions etc, your income could drop with little or no warning., make sure you save for potential lean times.
Uncertain Income: Income can fluctuate based on patient flow, as a self-employed clinician, it is in your best interests to build relationships to make sure patients come back and refer others to you.
Mistakes: You are responsible for finishing any unsatisfactory work in your own time. The financial burden of putting right your work falls to you. While many principals, don’t charge you for materials, surgery time, staffing costs etc, required to put right your errors, shouldering these costs themselves, they could do., and they could ask you to put right the mistakes at times that are outside the hours that you have contracted to the practice.
CPD: courses will need to be self-funded, and will may be excluded from the hours that you have contracted to provide to the practice and therefore need to be done In your own time, after hours, weekends or other non-contracted hours.
HR: If you choose to engage people to help, you will be responsible for the HR and compliance associated with recruitment.
Employment rights: For many the biggest downside of being self employed Is that you don’t have any of the legal employment rights that an employed member of staff has. these Include,
- getting the National Minimum Wage
- protection against unlawful deductions from wages
- the statutory minimum level of paid holiday
- the statutory minimum length of rest breaks
- to work no more than 48 hours on average per week or to opt out of this right if they choose.
- protection against unlawful discrimination
- protection for ‘whistleblowers’ who report wrongdoing in the workplace.
- not to be treated less favourably if they work part-time.
you will not be entitled to and need to make provisions yourself for
- Statutory Sick Pay
- Statutory Maternity Pay
- Statutory Paternity Pay
- Statutory Adoption Pay
- Shared Parental Pay
Regulatory and Legal Obligations: You’d need to ensure compliance with regulations and professional standards.
Locum cover: once you have agreed how many weeks / days you are contracted to work, being self employed you can take more off than this and you will be responsible for providing locum cover to honour your commitment.
Work-Life Balance: Balancing patient care with business tasks might impact your work-life balance unless you prioritise your time and tasks.
Employed Dental Associate:
Pros:
Stability: Employed associates typically receive a steady salary and often enjoy benefits like holiday and sickness pay, maternity / Paternity , pensions etc
Clinical Focus: Your primary focus can be on providing patient care without the added responsibilities of business management.
Less Administrative Burden: You are less likely to have to deal with administrative tasks, marketing, or patient scheduling, these can be taken care of by the in-house admin team.
Employment rights: For many they consider the major benefit of employment is the legal security of employment rights, please see those listed above.
Structured Work Environment: Employment offers a structured work schedule and potentially better work-life balance.
Collegial Environment: Working with a team of colleagues can provide a supportive atmosphere and opportunities for learning.
CPD: Courses will usually be scheduled within your working hours and so you won’t have to take annual leave to do a course.
Cons:
Limited Autonomy: You might have less control over your schedule, treatment decisions, and the direction of patient care.
Earnings Cap: Your income is often determined by a fixed salary, potentially limiting your earning potential compared to self-employment.
Lack of Decision-Making Authority: Practice decisions are usually made by the practice owner or management, with limited input from associates.
Less Personal Fulfilment: If you’re passionate about shaping patient care and practice policies, being an employed associate might not provide the same fulfilment.
Take home pay: Because you are salary includes provision for holidays, sickness, maternity, pensions, PAYE, and other employment benefits etc, your take home pay with likely significantly lower than if you are self-employed.
CPD: You may find that you have less flexibility over which courses you attend unless you attend outside work time and fund them yourself.
Fixed: When you are employed you are generally limited to only being able to work for one practice / principal / trust.
Increasingly principals are offering salaried positions and general practice, in the past if you wanted to be employed your choices were limited to hospital work, community services and if you were lucky for large corporates. Making the decision between employment and self-employment is a big choice and you must go in with your eyes open. Seek out experts to assist you in your decision making, accountants, IFAs, HR experts and a career coach. Whichever path you choose, ensure that it aligns with your values, professional aspirations, and personal well-being.
Tax Advantages of self employment
Tax Deductions:
As a self-employed individual, you can deduct certain business-related expenses from your taxable income. This includes expenses such as office rent, equipment, travel, and even a portion of your home utility bills if you work from home. These deductions can significantly reduce your taxable income.
Simplified Accounting:
The UK offers a simplified accounting method called the “Cash Basis.” This means you only need to pay tax on the income you’ve received and the expenses you’ve paid, making it easier to manage your finances.
National Insurance Contributions:
Self-employed individuals pay lower National Insurance contributions compared to employees. This can result in savings over time.
Tax Credits:
Depending on your income, you may be eligible for tax credits such as Working Tax Credit or Child Tax Credit, which can provide additional financial support.
Responsibilities:
Register with HMRC:
You must register as self-employed with HM Revenue and Customs (HMRC) within three months of starting your self-employment. Failing to do so can result in penalties.
Tax Returns:
You’re responsible for completing an annual Self-Assessment tax return. This includes reporting your income and expenses accurately. The deadline for filing your tax return is usually January 31st.
Payment of Taxes:
You must pay Income Tax and National Insurance on your earnings, and the amount due will depend on your income level. It’s essential to set aside money for these tax payments throughout the year to avoid financial strain when the tax bill comes due.
Keeping Records:
Maintain detailed records of your income and expenses. This documentation is crucial for accurate tax reporting and can help you maximize your allowable deductions.
Class 2 and Class 4 NIC:
You’ll need to pay Class 2 and Class 4 National Insurance Contributions based on your income. These contributions go towards your state pension and other benefits.
In summary, being self-employed in the UK offers tax advantages like deductions and lower National Insurance contributions. However, it also comes with responsibilities, including tax registration, accurate record-keeping, and timely filing of tax returns. Staying informed about your tax obligations and seeking professional advice can help you make the most of the tax advantages while fulfilling your responsibilities as a self-employed individual in the UK. Make sure you get qualified advice when choosing what employment suits suits you best.
