Facts and consequences

There has been an increase in incorporations of dental practices during the past few years. Whilst many incorporations have been properly done and for valid reasons, it is estimated that many more have not been. So how do you ensure that your incorporation is robust?

It is important to recognise that the Limited Company ('NewCo') is a separate legal entity and personality from the sole practitioner or partnership ('dentist'). The incorporation of a practice should be envisaged as an arms' length sale from dentist to a quite separate party, NewCo. The fact that the the dentist may be the sole director and shareholder of NewCo is irrelevant to the incorporation process.

For an incorporation to take place, the assets and liabilities of the practice must be properly transferred to NewCo. It follows that as a general principle, no assets which are being used by the practice in its day-to-day operations should be left in the clinician's personal ownership, that is outside NewCo, although there are some exceptions. Assets which should be transferred may include, for example, dental chairs, cabinetry, autoclaves and stock.