Balancing the books
How can locum optometrists keep their finances in shipshape condition? OT approached David Davies, of TWD Accountants, for his thoughts. Plus – locums share their tips on workload planning
14 April 2023
For many optometrists, switching to a locum role will be the first time they take responsibility for a raft of financial considerations that may have escaped their attention when working for a single employer.
For example, how will the locum optometrist ensure that they can still pay their bills if they go on holiday or are unable to work due to sickness?
How can a self-employed practitioner make sure that they are meeting their tax obligations?
OT spoke with David Davies, of TWD Accountants, about the financial preparations an optometrist should make when switching from an employed role to locum optometry.
Beginning a business
Davies told OT that a common mistake many optometrists make when switching to locum work is to underestimate the obligations that come with becoming self-employed.
“You have to realise that you will be running a business and you need to do that properly,” he said.
Davies highlighted the importance of receiving financial advice from a qualified professional when undertaking some of the more challenging decisions that come with locum work – such as employment status for tax purposes, and whether to practise as a sole trader, limited company or partnership.
You will be running a business and you need to do that properly
He highlighted that the tax advantages for locum optometrists associated with setting up a limited company have diminished over time, and will only benefit locum workers who are earning at a certain level.
There are also more costs and responsibilities associated with establishing a limited company, Davies added.
“If you decide to become a limited company, you must talk to an accountant beforehand. You need to understand whether it will benefit you,” he said.
Davies recommended setting up a separate bank account and credit card for all business expenses and income, and saving at least 25% of all income for the end of year tax bill.
Locum optometrists need to register for self-assessment with HMRC, and set up a book keeping system that allows them to record their income and expenditure accurately.
“It could be anything from a paper-based system to an Excel spreadsheet to a proper accounting package. I would always say that it is good practice to use an electronic format,” he shared.
Davies emphasised that the paper records that support accounts – such as receipts or invoices – need to be kept for six years after the end of the tax year.
“Nowadays, I charge appropriately for my time and only work in places I love,” she said.
“It is still a battle balancing work and home life, but it’s definitely more balanced than a few years ago as I aim to have at least two or three days off each week,” Rushton added.
When working in practice, Rushton avoids leaving anything to the next day – such as letters, referrals or other forms.
“I can go home with a clear head and enjoy my evening, starting afresh the next day,” Rushton said.
Her top financial tip for optometrists who are new to locum work is to save a third of what they earn to pay tax.
When she has more personal commitments, she will book fewer days.
“I think in order to keep organised you really need to put everything into your calendar and think quite far ahead,” Asif shared.
At first, Asif used a paper diary to manage her commitments, but now she uses her phone calendar and web-based platforms.
“This allows me to see the whole year ahead wherever I am. There are a number of apps now used by multiples allowing direct access to calendars so that this appears automatically in the diary when days are booked,” Asif said.
In contrast to working in an employed role where a set amount of money enters an optometrist’s account on a set date, cash flow for a locum optometrist is more varied.
“It is a good idea to have reserve cash in your account until you work out the cash flow. Try and send invoices as soon as is possible, because if you delay this, it will delay money coming into your account,” she said.
Like Rushton, Asif also highlights the importance of saving to pay the end of year tax bill when working as a locum.
Words of wisdom
Locum optometrists share the key lesson that they have learned over time when it comes to organisationFrancesca Marchetti: “My mantra is ‘Fail to prepare – prepare to fail.’ Preparation is key: familiarising yourself with the practice, the software, the equipment, the journey and your diary for the day. Keep the practice telephone number to hand in case you are running late due to an accident or delayed train”
James Brawn: “I have learned to say no. Early in my career, I felt that I could not say no to working conditions I felt uneasy with. Now I am happy to say no to conditions I am not comfortable with”
Kristen Cottier: “Initially, book only a few days at a new practice. Every practice is different and the practice staff make a huge difference, but you will soon know if the practice is a good fit for the way you work and if you're going to enjoy working there”
Priya Patel: “Remember that you are working as part of a team – get to know the staff a little, even if you are there for only one day. Leave the door open: this means that you are approachable to the team for any small requests they have. These little things can make a world of difference”