Sadly, when it comes to achieving growth and profit, too many Psychologies Clinic make simple mistakes which cost them dearly. If you’re not careful, you could follow in their footsteps and end up falling well short of your goal.
But don’t worry – we’re here to help.
We’ve put together a list of the 5 most common mistakes made by Psychology Clinics – as well as easy-to-follow tips on how to avoid them.
#1 First Mistake
Far and away the most common mistake Clinics make is thinking all they services are GST free. We see it all too often – we’ve honestly lost count of how many people we’ve come across who have made this error.
● Not everything a psychologist does is necessarily GST-free. But how depends on who pays and for what.
- Who PAYS
- If a Patient pays, straightforward. It is GST free service.
- If it is covered by Medicare, it is GST free.
- If Private Health insurance pays for something that would have been GST free if paid directly by the patient, then it is GST free.
- If Workers Compensation pays that would have been GST free if paid directly by the patient, then it is GST Free.
- If paid by NDIS and it is part of the participants plan, it is GST Free.
● However, if it is paid by a third party like schools, childcare center, employer, community groups then it is not a GST free supply. You will need to charge GST for your Psychology service.
#2 Second Mistake
The subcontractor relationship with the clinic is another common mistake and is right up there with GST Mistake in terms of the amount of Money it costs Clinics. It’s such an easy mistake to avoid, but it happens WAY more often than it should.
Most clinics hire subcontractors on an arrangement where the clinic receives 30% of the fees and the contractor receives 70%. The practice operator covers expenses like premises, outgoings, reception, admin, and marketing.
When the clinic issues an invoice to the patient, the Psychology fees charged are GST free, but the contractor must charge GST on the 70% fee invoiced to the clinic.
If the patient receives an invoice directly from the contractor, the clinic charges the contractor a 30% fee and includes GST, which the contractor can claim back on their BAS.
Failing to apply the correct GST treatment in these situations can lead to significant financial consequences for the clinic, especially if subjected to an ATO audit.
#3 Third Mistake (This can cost you thousands of dollars)
This mistake might not be as common as the first two we’ve outlined – but that doesn’t make it any less harmful. In fact, it could be the most costly out of the three – an error that could see you throw away thousands of dollars and leave you further away from achieving your goal than when you first started.
Failure to have proper contracts with subcontractors can lead to potential legal issues where the subcontractors might be considered as your employees, making you responsible for various back payments like PAYG, Super, Payroll Tax, and Workcover.
Six crucial factors are used to determine the status of a worker as either an employee or a contractor, including control, results/independence, risk, provision of tools and equipment, ability to delegate/subcontract, and basis of payment.
To safeguard your contract in court, it is essential to address all these factors thoroughly. Recent high court decisions like CFMMEU v Personnel Contracting Pty LTD (2022) HCA 1 and ZG operations Australia Pty Ltd v Jamsek (2022) have influenced the criteria for distinguishing employees from contractors.
Given the ATO’s constant scrutiny and attempts to reclassify contractors as employees, it is important to be cautious about potential pitfalls. Many general accountants and lawyers outside the Allied Health industry might not be aware of these critical factors. Our team of legal experts are well adverse of these critical issues.
#4 Fourth Mistake
While not as costly as third Mistake, this one can still have serious consequences.
Many Accountants fail to reconcile Halaxy with their bookkeeping system, simply categorizing all received money as sales. However, not everything is GST free, making it crucial to reconcile the two systems to ensure proper GST claims for taxable items. Our team is extensively trained in performing this reconciliation, enabling us to easily verify numbers during an ATO audit.
#5 Fifth Mistake
How to choose the RIGHT Accountant?
Selecting the perfect accountant requires thoughtful consideration of their specialization and expertise. Just as you wouldn’t expect to find pizza on the menu at an Indian restaurant, not all accountants offer the same services. It’s essential to choose an advisor who is well-versed in your industry and knowledgeable about legal, HR, and marketing matters. With the right expert by your side, your business can thrive and grow, whether you plan to expand from 3 to 20 employees or pursue even greater aspirations. A skilled advisor will empathize with your challenges and provide valuable guidance to help you achieve your desired outcomes. Making the right choice when it comes to your accountant is a critical factor in ensuring success in all your business endeavors.
Claim Your FREE No-Obligation 30-Minute Consultation And We’ll Help You To identify the above errors and how you can rectify it.
Thank you for taking the time to read this eBook – we hope you’ve found the information helpful and can use what you’ve learned to implement straight away.
If you’re truly serious about getting the above right and growing your practice, then we have excellent news. For a limited time only, we’re offering you a free, no-obligation session with one of our Accountant experts.
During your 30-minute session, we’ll discuss your current situation, what your goals are and how we can help you achieve them using our proven system.
We’ll also cover a stack of valuable information together, including…
How you can achieve more money using our profit strategies, what you should never do when trying to hire subcontractors, and how to avoid all the most common mistakes that Psychologist make which sabotages their success.
There’s no cost or obligation to move forwards with our service afterwards if you feel like it’s not for you. It’s simply a free information session designed to educate you and provide value to you in advance.
To claim your free consultation or find out more information about this limited-time offer, all you have to do is click the link below.