Selecting the best business structure—sole trader, company, partnership, or trust—is a key decision for dentists and depends on factors like cost, liability, family income distribution, and long-term goals.
Sole Trader
Ideal for dentists starting out or running a small practice. It’s simple and cost-effective to set up with minimal reporting requirements. However, you’re personally liable for debts and legal risks, and all income is taxed at your marginal rate. You also can’t split income with family members.
Company
A company offers limited liability and can be more tax-efficient. You can employ yourself and claim wages as a tax deduction. However, setup and ongoing costs are higher, and you must meet ASIC and tax reporting obligations. Be mindful of the Personal Services Income (PSI) rules—if most income comes from your personal work, it may be taxed at your individual rate, not the company rate.
Trust
Trusts are complex and costly but may suit dentists with family members to distribute income to or those seeking asset protection. They require a formal trust deed and ongoing legal and accounting support. While trusts offer tax planning benefits and liability protection, income must be distributed
annually or taxed at the highest rate. Losses can’t be passed to beneficiaries, and borrowing can be more difficult.
Get Expert Advice
The right structure can impact your tax, liability, and ability to grow your practice. Speak with your accountant or financial adviser to ensure your structure aligns with your professional and personal goals.
Contact AMA Financial Services today to discuss the best option for your practice, amafinancialservices.com.au
