Starting in aesthetics can also require you to set up your own business which can be challenging at times as for many doctors, dentists and nurses is something you probably haven't done before!!
There are several ways which your aesthetic business can be started and here Dinesh from DA Accountants discusses the pros and cons of setting up as a Sole Trader vs Limited Company. ( 4 min read)
Sole Trader
Running your business as a sole trader means that you are personally responsible for your business. You can hire staff, but your business is owned and controlled by just one person; you. As such, the law sees your business and yourself as the same which means you are personally liable for any losses or debts that your business makes. Of course, this does mean that you can keep any after-tax profits. Often it is business owners who provide a specialist service such as hairdressers, plumbers or electricians who choose to run their businesses as sole traders.
Sole Trader Advantages
· As the sole owner, you can keep all of your business’ profits.
· You have flexibility to draw/transfer monies from your business without any formal salary slips
· Accountancy costs and other professional fees can be lower
Sole Trader Disadvantages
· You are fully liable for any loss your business makes, so you may have to use your own money to repay any debts.
· There’s no one to share accountability with. Whilst you can hire staff, most important business decisions fall on you.
· Your profits are taxable on you regardless of whether you withdraw the build up of profit monies from your bank account or not.
Limited Company
Running your business as a limited company means you will be setting up a private organisation to run your business. Your business will then have its own legal identity separate to yours and its finances will be kept separate from your personal finances. As director of your limited company, this means you will have limited liability on any losses or debts incurred by the business.
Limited company Advantages
· As director of a limited company, you can pay yourself in a combination of salary and dividends. With dividends having a lower tax threshold than salaried pay, this can mean you are much more tax-efficient than when just paying yourself a salary.
· You have greater control over paying income tax on monies withdrawn from the business
· You can potentially add other shareholders and ‘split’ income and thus take advantage of favourable tax rates.
· All shareholders have a limited liability should your business incur losses or debt; it’s not your personal responsibility.
Limited company Disadvantages
· A more rigid structure on income withdrawal
· Potentially requiring to operate a formal and HMRC registered payroll to allow you to withdraw salary from the company
· Greater director responsibilities under the Companies Act
· Closing down a company can be a longer drawn out process and potentially incurs more professional costs
Main difference between a sole trader and a limited company?
The overall biggest difference between a sole trader and a limited company is that a sole trader is owned and controlled by one person who has unlimited personal liability for the business whereas a limited company will have its ownership split into equal shares. The shareholders of a limited company have limited liability for the business, this may mean that there is less personal monetary risk involved when choosing to set up your business as a limited company.
Inspired Cosmetic Training began teaching medical aesthetics in 2010.
And since then, we have helped more than 3000 dentists, doctors, nurses and midwives from throughout Scotland and the UK start their medical aesthetics career.
Many of them are now running their own profitable aesthetic clinics, which is what we prepare our delegates for!
We’ve built a reputation of providing high-quality training and our tutors are all highly qualified, skilled and extremely knowledgeable in medical aesthetics.
If you have any more queries, please do not hesitate to ask us.
Call Inspired Cosmetic Training on 0141 638 4098. Or email office@inspiredcosmetictraining.com
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Check out some of our latest courses:
24th Sep - Foundation Botox & Dermal Fillers
24th Sep - Cheeks & Nasolabial Folds (am)