Bookkeeping for Doctors & Medical Specialists: Curing Your Cash Flow

Medical professionals face a unique set of accounting challenges. Between split billing, service facility fees, and the confusion around GST status, it is easy for a thriving private practice to become a bookkeeping nightmare.

If you are a GP, Surgeon, or Specialist running a private practice, accurate financial data is critical for tax planning. Here are the specific areas you need to watch.

1. The "Service Entity" Trap

Most doctors don't simply "receive wages." You likely operate under a Service and Facilities Agreement. The clinic collects patient fees on your behalf, deducts a "Service Fee" (e.g., 35% for rent, admin, and nursing support), and pays you the net amount.

The Mistake: Many doctors only record the net payment as income.
The Fix: You must record the Gross patient billings as income and the Service Fee as a tax-deductible expense. Getting this wrong distorts your turnover and can trigger payroll tax audits for the clinic.

2. Not All Medical Services are GST-Free

There is a dangerous misconception that "all doctors are GST-free." While standard patient consults are indeed GST-free, many other streams are not.

• Taxable (Must charge GST): Expert witness reports, cosmetic procedures not deemed medically necessary, and incentive payments from pharmaceutical companies.
• GST-Free: Medicare-eligible consultations and referrals.

Your bookkeeping software needs to split these income streams automatically to ensure your BAS is correct.

3. Integrating Best Practice / Genie with Xero

Are you manually typing daily totals from your practice management software (Best Practice, Genie, Halaxy) into Xero? This is a recipe for error.

We implement integration tools (like Cubiko or custom APIs) that automatically push daily billing summaries into Xero. This ensures your bank deposits match your patient records down to the cent, saving your admin staff hours of reconciliation time.

4. Managing Mixed Income (Private vs. Public)

Many specialists split their time between a private room (business income) and a public hospital (salary/PAYG). This creates tax planning complexity.

We ensure your bookkeeping structure separates these streams clearly. This is vital for calculating your correct "Division 293" tax liability (the extra tax high-income earners pay on super contributions).

Summary

Your focus should be on patient care, not reconciling complex facility fees. By setting up the right "Service Entity" structure in Xero, you can ensure your practice runs as smoothly as your theatre list.