Now might not seem like the best time to start a pharmacy business in England given economic uncertainty, but the stats show quite the contrary.
In the first six months of the year, 233,660 new businesses were created in all sectors of the UK economy. That’s no mean feat after the pandemic.
There will always be a need for pharmacies, especially as we slip towards the end of the year when colds and the more usual viruses rear their ugly heads again.
If you want to start a pharmacy and you have the qualifications to do it, the question is, should you start from scratch, or buy an existing business?
There are pros and cons for both but, in either case, it’s vital to research your market, assess your competition and estimate consumer demand.
Some qualified pharmacists prefer to buy an existing pharmacy with all of those metrics established and the premises embedded into a community.
But for others, building a pharmacy from scratch is a more appealing proposition altogether. At Diamond, we can help you with every step of your journey, whichever route you take.
Settling on a structure
Should you want to buy your first pharmacy, the usual trading structures are to operate as a sole trader, in a business partnership, or as a limited company.
For tax purposes, you will be treated as self-employed if you go down the sole trader or business partnership route. The former puts you in control of the pharmacy, while the latter sees ownership split between partners.
In both cases, you will have to submit a tax return via self-assessment on or before 31 January each year, after the end of the tax year on 5 April the previous year. The tax burden can be substantial, though.
If you become a director of your own limited company, your own finances will be separate to that of your pharmacy. It’s more complex to set up, although we can handle that for you, comes with responsibilities.
From a tax perspective, the main rate of corporation tax will apply at 19% in 2021/22 on any profits your pharmacy makes. You have a choice how to remunerate yourself by extracting profits, usually through a combination of salary, dividends, and pension contributions to ensure total tax-efficiency.
Registering your pharmacy business
A whole host of legal obligations lie in wait in the first year of starting your pharmacy. If you choose to incorporate your business, you must register it with Companies House.
Given the often costly value of essential goods for sale in your pharmacy, you should register for UK VAT if your annual taxable turnover is more than £85,000 in any 12-month period.
While you also need to be added to your local NHS England team’s pharmaceutical list and register your premises with the General Pharmaceutical Council, we might be able to reclaim these costs in certain circumstances.
Hurdles to overcome
As accountants for pharmacists, we know the obstacles involved with starting a pharmacy. Fortunately, we are in the perfect position to overcome them.
If you need help sourcing finance, we can help. If you want to be as tax-efficient as possible, we can do it. If you want us to take care of your registrations for tax purposes, come to us. Get in touch to see what we can do for you and your pharmacy.