We are often contacted by dental clients who have taken the decision to change the legal structure of their practice from that of sole trader or partnership into a company. This decision is often driven by the pursuit of adopting the most tax efficient vehicle for conducting the business. Before making this change it is essential to take specialist legal and accounting advice from your professional advisers. The right course of action for one practice may not be the right course of action for all. Bespoke advice should be the foundation of any move towards incorporation.
Once the decision to incorporate has been taken there are numerous considerations and steps required to ensure that the process is completed smoothly and successfully. Some of the key considerations are noted below, but there are many others and you should take specialist legal as well as accounting advice to ensure that nothing is missed.
Incorporating the company
This is something that your professional advisors or a company formation agent will be able to do for you. You will need to choose a unique name for the company. You will need prior approval from the GDC if your name includes restricted words like “dental” or “dentistry”. You will also need to decide who the directors and shareholders will be. There are various rules associated with dental bodies corporate, including the requirement that at least 50% of the directors be registered dentists or dental care professionals.
Transferring the business
Once the company has been formed the practice business and assets then need to be transferred into the newly incorporated company. It is advisable to record this transfer in writing in case anyone, such as HMRC, require evidence this has occurred. The transfer can be recorded via a simple legal agreement known as a business transfer agreement.
Premises
You will need to consider what is to happen with the practice premises. If you own the premises in your own name you may wish to transfer the title into the company. Alternatively, you may decide to retain the title in your own name and lease them to the company. If the practice currently leases its premises then the landlord will need to consent to the assignation of your right as tenant under the lease to the company.
Staff
Although nothing will change for the staff on a day to day basis, technically as the practice is transferring to the company, the staff contracts of employment will automatically transfer to the company under the TUPE regulations. It is important to ensure that you meet your obligations under the TUPE regulations in relation to the transfer. Your legal advisers will keep you right on the nature of those obligations as what is required varies depending on the size of the business.
Bank
You will need to notify your bank of the incorporation of your practice and their consent may be required.
Thorntons' Dental Team are specialists in the sector and we would be happy to guide you, with our expertise, through the incorporation process. Get in contact with one of the team today on 03330 430350 for specialist advice.
