Presentation by Sue Walsh Finance Manager Great Ayton Health Centre UNDERSTANDING PRACTICE ACCOUNTS

Role of a GP in Practice Providing a service for the NHS Self-employed Manage own affairs Is a business Responsible for – Employing staff – Controlling Finances – Choose what services are provided to patients

GP Changes in Contract New contract introduced in 2004 Change of payment methods – Introduction of Targets – Cash-limited funds GP’s become more proactive

Introduction to Practice Accounts What are practice accounts? Why do we need accounts? How often are accounts prepared? Who prepares them and why? Do accounts have to be prepared in a certain way?

What are Practice Accounts? Provide a record of the financial performance of Practice Comprise – The profit and loss account – providing record of income and expenditure – The balance sheet – record of the value of assets and liabilities at a given point in time. Also shows GP share of assets

Why Do we need Accounts Calculate profits Provide Inland Revenue with information for tax purposes Show comparative figures from previous accounting period Make financial decisions – Are profits low? Does expenditure need to be reduced?

How often are accounts prepared? Prepared annually Can also be produced more often – if a partner leaves practice part of way through the year.

Who prepares them and why? Practice employs a Chartered Accountant Estimate tax liability Accountant provides number of services – Ensure bank statements correspond to your money movements – Prepare your accounts – GP superannuation certificates – Tax payments – making sure that your tax bill is no larger than it ought to be – Partnership and personal income calculations for tax purposes.

Do accounts have to be prepared in a certain way? Accounts comprise  Profit and loss account and the balance sheet

Profit and Loss Account Why is it important? Show the profitability of the practice Profits to be calculated, declared on the GP’s tax return

Income Shown at top of profit and loss account Analysis of headings shown on additional pages called schedules or notes Overheads/Expenses Expenses incurred in day to day running

Net Profit Income less expenses = net profit Shows the profitability Shared to give individual earnings

Balance Sheet Shows values of assets and liabilities Assets Items of amounts practice own or are owed to them For example premises, bank account Divided into ‘fixed’ assets – long term assets And current assets – short term assets Liabilities Amounts the practice owes - mortgage

Current Account

Joining a Practice Do they cover a full year Look at income Is non-NHS income high Are expenses reasonable Bank Balance Similar capital accounts Are Practice premises owned

Finally Remember that as a Partner in a Practice you will now be self-employed, it is your business. Any Questions?