Associate dentists can add significant value to a dental practice by leveraging time, providing diversity in skills and creating great succession planning. However, many practices experience concern around the correct legal structure of the engagement.
There are three common structures:
Employee – the associate dentist receives salary (with tax withheld) and superannuation guarantee. Payments to the employee dentist are subject to workers’ compensation and payroll tax.
Contractor (Commission Model) – The associate dentist invoices the practice a percentage of patient fees (after lab fees). There is usually no superannuation guarantee paid or tax withheld. Payments to the contracting dentist are usually included when calculating workers’ compensation and payroll tax.
Contractor (Facility Model) – The practice acts as agent for the associate dentist and collects the patient fees on their behalf. The practice charges the associate dentist a facility or service charge for use of equipment and facilities. Remittances made to the associate dentist are not normally included for workers’ compensation and payroll tax purposes.