Well in a nut shell we quickly agreed that there are not really many options in this format, other than employment or association to bring someone on board. Associating with another business or practice does have its benefits, but does not contribute directly to the growth in your own business value.
So what are the current options available to a healthcare practitioner in South Africa, under the current legislation? Well there is the option to stay as a single owner solus practice, or you could register the business as a
- Incorporated company
You cannot under the Health Professions Council of South Africa regulations, register your practice as a
- Closed corporation
- Pty (Ltd)
as both of these offer a degree of “shelter” behind the “corporate vale”
So where does that leave us? Well, if my auditor’s advice is anything to go by, “A partnership is a sinking ship!” I would not take it that far, but certainly try to learn some lessons from this, being:
- If a partner ever decides to leave from the partnership (or dies), the business entity needs to be dissolved, and started again under a new name
- The name of the business, and the business as it is,will not have a long-term life span
Here are some of the benefits of setting up the business structure as an Incorporated Company
- You declare shares, making the ownership of the business proportionate to the number of shares you own
- These shares can be purchased and sold. This allows for the dynamic flow of ownership of the practice, without jeopardising the longevity of the business or its on-going concern as a viable practice
- Share value in relation to the value of the practice gives instant Return on Investment information to shareholders
Sure, so there must be a down-side to establishing an Inc. These include:
- You will have to spend the money on registering the Inc., which can be more than registering other business structures
- You will have to be audited yearly, which carries it’s own costs. In my experience though, a good auditor and good tax advice can often offset these additional costs
So where does that leave us? Well, if you are looking at taking your practice seriously, and want to build up a true asset which can work for you as a business, then consider an Incorporated company.
Why not make the shift from working for yourself, to owning a business?
After all, who owns whom?