Presentation by Sue Walsh Finance Manager Great Ayton Health Centre

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

2. 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

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

4. 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?

5. 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

6. 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?

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

8. 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.

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

10. 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

11. 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

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

15. 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

18. Current Account

19. 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

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