Why you need to renegotiate your associate contract now

Why you need to renegotiate your associate contract now

Over the last month I have noticed a significant increase in calls and e mails from principals asking,

“How much should I pay my associate?”

“How do I calculate my associate’s payments?”

In all the time I have been working with principals I have yet to find one who

•  Pays themselves as high percentage of gross as they pay their associates
•   Has associates who cover their costs or even make a profit for the practice.

I apologise if I appear blunt, and I would suggest that experience shows, the way you are remunerating your associate is financially killing your practice.

What I have been suggesting for decades, goes against conventional practises and for some may be unpalatable and that does not make it wrong.  Thinking the earth was flat was a long held conventional thought and it was incorrect.

Your associate is self-employed, and you may be running a LTD, LLP, partnership or working as a sole trader, your relationship with your associate is business to business.

Your associate is self-employed and to receive the benefits of this status they have responsibilities that are clearly stipulated by HMRC, see below or at their we-site https://www.gov.uk/working-for-yourself

Working for yourself

If you start working for yourself, you’re classed as a sole trader. This means you’re self-employed - even if you haven’t yet told HM Revenue and Customs (HMRC).

Running a business

You’re probably self-employed if you:

·         run your business for yourself and take responsibility for its success or failure

·         have several customers at the same time

·         can decide how, where and when you do your work

·         can hire other people at your own expense to help you or to do the work for you

·         provide the main items of equipment to do your work

·         are responsible for finishing any unsatisfactory work in your own time

·         charge an agreed fixed price for your work

·         sell goods or services to make a profit (including through websites or apps)

Many of these also apply if you own a limited company but you’re not classed as self-employed by HMRC. Instead you’re both an owner and employee of your company.

You can be both employed and self-employed at the same time, for example if you work for an employer during the day and run your own business in the evenings.

Imagine you are doing a conversion on the practice and putting in a new surgery. You will engage a builder who is self-employed, and you will agree a price with them to complete the work. It is unlikely that your builder is also a qualified electrician, plumber or an experienced plasterer. Your builder will subcontract these, and possibly other services, and in doing so, is responsible for recruiting them, paying them and the standard of their work. Your builder works under the same HMRC self-employed rules as you and your associate.

I am curious if this is the case what is the rational for

• The practice paying any portion of the associate lab bills?
• The practice paying any portion of the invoices raised by the hygienist or therapist for work subcontracted by the associate.

Moreover, if a self-employed associate is truly responsible for its success or failure and is responsible for finishing unsatisfactory work in their own time, why are practices subsidising the associates when they are redoing remakes? Currently every associate and principal I have spoken to about this says the associate does remakes free of charge and so does not get paid. Double wammy to the practice they are also not receiving any income and still paying all the fixed overheads including team and materials. To be wholly responsible, Should the associates not be paying a surgery rental fee to the practice when they choose to do work free of charge?

As principals you do have responsibilites to.

• Know what your surgery costs are.
• Share the surgery costs with your associates
• be open about the targets the associates need to achieve and why.

I have created an Associate Costings Calculator, spreadsheet that enable you to compare various associate remuneration packages and their impact on the financial security of the practice, if you would like more information please get in contact.

Responsibility + Accountability  = Predictability 

In the 10 years I have been a dental business coach working with practices to

• ·         Reduce your stress
• ·         Save you time
• ·         Improve your profitability
• ·         Enhance your team
• ·         Build your business confidence

If you want to improve your practice or your personal life, please e mail Jane@IODB.co.uk or call 07989 757 8854 for more information.