Profit Loss Projection Sheet

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Profit Loss Projection Sheet Powered By Docstoc
					Understanding Practice
      Accounts
        Jenny Stone, ACA
      Ramsay Brown and Partners
              Ramsay House
             18 Vera Avenue
                 London
                N21 1RB
           Tel: 020 8370 7705
   E-mail: Jenny@ramsaybrown.co.uk
       What are Practice Accounts?
   Historic record of the financial performance of the
    practice
   Accounts will be prepared from the books & records
    the practice maintain throughout the year
   Consist of Profit & Loss account & Balance Sheet
   Profit & Loss – Record of practice income &
    Expenses
   Balance Sheet – Provides practice with a value of
    their assets and each partner’s share of those assets.
   The accounts will include notes to support the profit
    and loss and balance sheet
             Purpose of Accounts
   Purpose of accounts
      Calculate profits to declare to tax man
      Useful tool in making financial decisions
      Calculating projection of drawings
      Bank may require for lending purposes
   Accounts will usually be prepared annually to the
    practice year end
   Accounts will include comparative figures, this will
    be the results for the previous accounting period
   Figures in brackets means they are deducted from
    another figure in the accounts
                How are GPs Paid
   GP practices have a contract with the PCT, this will
    be a GMS, PMS or APMS
   GMS Practices
       Receive a global sum payment calculated based on number
        of patients
       MPIG Correction factor
       Quality & Outcomes framework
       Enhanced Services
       Seniority income to reward experience within NHS
       Reimbursements of expenses e.g. Rent & Rates, drugs
        purchased
       Other income from medical reports and other sources
               How GPs are Paid

   PMS Practices
       Locally negotiated contract
       Can also include growth money towards cost of
        employing salaried GPs
       Quality & Outcomes framework
       Enhanced Services above those included in
        baseline
       Seniority Income
       Reimbursements similar to GMS practices
       Other income similar to GMS practices
         Profit and Loss Account
   Shows profitability of the practice
   GP & nurse partners are running a business
    and the object is to make a profit
   New partners thinking about joining will be
    interest in the profitability of the practice
   Profits need to be calculated for the tax man
   Profit of the practice is allocated between
    partners according to profit sharing ratios
   Profit sharing ratios are usually based on
    number of sessions worked
Balance Sheet & Current Accounts

   Balance sheet shows snapshot of the practice
    assets and liabilities
   Two halves to the balance sheet – top half
    lists the assets & liabilities, the bottom half
    shows each partners ownership of those
    assets – both halves will equal
   Current accounts are very important as show
    the individual partners money left in the
    practice
                     Drawings
   Need to be set at a realistic level, take into
    account expected lost income and/or
    increased expenses
   Drawings need to be reduced to take account
    of changes to superannuation from 1st April
    2008
       Employees superannuation increase
       Earnings cap removed
   Review throughout the year, if practice is
    getting into cash flow difficulty may need to
    reduce
     Changes to income for 2008/09

   Global Sum will increase by 2.2%, amount
    per patient increases from £54 to £56
   However, if practice in receipt of MPIG, the
    correction factor will be reduced by any
    increase in global sum and therefore will
    receive no increase
   QOF – Removal of 58 QOF points to be put
    into extended hours
   Enhanced Services – No inflation uplift
          Maximising Profits

Increase Income
 No Inflationary Increase global sum & MPIG

 Increase practice list

 Practice Mergers

 No Inflation increase in QOF

 Aim to achieve maximum QOF points

 Ensure max enhanced services income and
  taking up new directed enhanced
 New Sources of non-nhs income
               Maximising Profits

   Difficult to maximise income
   In addition need to control/reduce expenses
   Review all areas for potential savings
       Cheaper suppliers for telephone, gas, electricity
       Keep an eye on stationery expenditure, costs can
        escalate
       Review work carried out by staff
       Review use of locums
       Setting budgets for all areas of expenses for year,
        allows you to monitor and control expenses
          Superannuation for GPs
   Superannuation based on GPs NHS pensionable
    profits
   GPs to complete end of year certificate to declare
    profits
   PCT make deductions each month based on an
    estimate of profits
   Once certificate submitted, PCT will collect any
    shortfall or refund of superannuation
   Ensure PCT deducting superannuation using up to
    date estimate of profits
   GP and non GP partners responsible for both
    employees and employers superannuation
           Changes to Superannuation
                Contributions
   Employee’s Contribution increased from 1st April
    2008 (2008/09)
   Based on tiered contribution rate
       0 to £19,682 – 5%
       £19,683 - £65,002 – 6.5%
       £65,003 - £102,499 – 7.5%
       £102,500 – 8.5%
   Rate for 2008/09 will be based on pensionable pay
    for 2006/07
   Earnings cap removed for ee & er contributions
   Earnings cap will still apply to added years contract
    commenced before 1st April 2008, for those GPs who
    were previously capped

				
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