Top financial tips for locum pharmacists

by Jan 9, 2024Finance, Running a business

Locum pharmacists often benefit from greater flexibility and competitive wages, but this career path also presents its own unique financial challenges.

But don’t panic — in today’s blog, our accounting experts share their top tips to help locum pharmacists take control of their financial destiny. Let’s get started.

Top financial tips for locum pharmacists

1. Choose the right business structure

Many locum pharmacists choose to operate as sole traders. If you opt for this business structure, you’ll need to register as self-employed with HMRC and file a self-assessment tax return each year to report your earnings and calculate your income tax liability.

In some cases, however, it may be beneficial for locum pharmacists to register as a limited company. Generally speaking, company directors have more reporting responsibilities than sole traders – but they also enjoy more tax-saving opportunities.

The best business structure will depend on your unique circumstances.

2. Develop good bookkeeping habits

As a locum pharmacist, you’re responsible for managing your own finances and tax obligations. As a result, developing good bookkeeping habits is vital.

Bookkeeping tasks can be repetitive and time-consuming, so make sure to use the different resources and tools at your disposal. Opening a business bank account, for example, can reduce your administrative burden by separating your personal and business finances.

After that, cloud accounting platforms like Xero and QuickBooks can pull transactions directly from your business bank account, eliminating the need for manual data entry.

If you’re too busy to balance your books yourself, hiring a bookkeeper could save you a great deal of time and stress.

3. Maximise tax deductions

Many locum medical professionals pay for business-related expenses out of their wages. As a result, keeping accurate, up-to-date records won’t just make it easier to report your income; it can also help you minimise your tax bill.

Make sure to log your mileage and other tax-deductible expenses throughout the year. The more organised you are, the more tax-efficient you’ll become.

4. Create a financial strategy

Creating and implementing a good financial strategy is vital for locum pharmacists to ensure both short-term stability and long-term success.

You’ll need to establish a comprehensive budget that accounts for both your personal and professional expenses. This includes setting aside funds for everything from petrol costs to taxes. Building an emergency fund can also help to protect you against unforeseen circumstances such as illness or a large gap in employment.

Your accountant can help you develop a strategy that reduces risk, takes advantage of tax-saving opportunities and aligns with your personal financial goals.

5. Prepare for retirement

Retirement planning can be challenging for many locum professionals. As a self-employed individual, you’re responsible for building your own pension pot. What’s more, frequent fluctuations in earnings and unconventional shift patterns may affect your National Insurance contributions (NICs) and state pension entitlement.

Taking actions such as setting up a personal pension plan or making voluntary NICs can help you feel more in control of your financial future. A financial adviser can help you build a solid retirement strategy.

6. Master IR35

If you provide your services through an agency or your own limited company, off-payroll working rules (also known as IR35) may impact your tax obligations.

Your IR35 status will depend on whether you operate in a similar way to an employee. If you’re a ‘deemed employee’, you may be required to pay more tax and NICs.

Failing to comply with these rules can result in serious consequences, so it’s important to understand how they affect you. We can help you navigate these complexities, ensuring you optimise your tax position while meeting all your tax obligations.

7. Enlist an expert

Financial acumen isn’t part of your pharmaceutical training, so why navigate the financial management maze alone? At Diamond Accounts, we specialise in accounting for pharmacy professionals like yourself so you can focus on what you do best.

Just as your customers come to you for healthcare advice, our expert accountants are here to answer your questions and offer further financial tips for locum pharmacists.

Reach out to us today to find out more.

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