With an ageing and growing population in Australia, the dental services industry in Australia has benefited in strong growth in the past five years. Growing private health insurance coverage has driven more consumers to visit their dentist regularly and undergo expensive procedures. With this increase in demand, more dentists are now turning to open their dental practice. Industry revenue in the dental industry is therefore projected to rise at a steady compound annual rate of 2.4% over the five years through 2020-21, to reach $10.4 billion.
As a dentist and business owner, the business structure you choose will have a significant impact on the way your dental business is run well into the future, and even its financial viability in a competitive market. Consequently, you should ensure that you have at least a basic understanding of all the structures available to your business, and an in-depth understanding of the ones you feel are most relevant to your situation. However, before deciding upon a final structure, it is advisable that you seek the advice of a business structuring lawyer. Two examples of structures available to your dentist business are that of a sole trader and partnership.
Operating as a Sole Proprietor / Trader as a Dentist
A sole trader business structure has been the traditional choice for dentists, operating as small-scale dental practice. As a sole proprietor, you will have complete control over the way your business is run, and have unhindered ownership of the business.
The primary benefit of being a sole proprietor or trader is that you can run your business in the manner you desire. A sole trader business is linked to the individual who establishes the business. Also, a sole trader is by far and away the least expensive business structure to both create and administer. Finally, a sole trader has complete access to the profits generated through business and can use them for any purpose they desire, making it the only business structure in which this is possible.
However, all this freedom does come at the cost of unlimited liability on the sole trader. Therefore, a sole trader may have complete control, ownership and access to the profits of the business but this also means that a sole trader has unlimited liability for actions undertaken in the course of business. The majority of establishments belong to small-scale sole proprietorships.
Partnerships for Dental Practices
New dentists are likely to open their own facilities, although some will join incumbent operators. As such, a partnership business structure is another option you could consider for your dentist business. This structure will provide you with significant control of your business. However, it will provide your business with greater equity than if you were to operate as a sole trader. Partnerships are a business structure where individuals combine their expertise and resources to further their individual business goals as a collective.
One of the primary benefits of a partnership business structure is that it has minimal formation costs, and once a partnership is formed there are minimum requirements relating to the structure that the business must maintain. Also, income may be split between partners. Therefore, partners within this business structure have a significant amount of room within which they can maneuver.
There are over 12,845 dental practices in Australia as of 2015 and steady 2.4% growth over the next five years. If you are looking to start your own dentistry business or expand your already existing dentistry business, consider which structure is most suitable for you. It is advisable that you seek the advice of a business structuring professional before deciding upon a business structure.