Opinions on my situation

[geoffw]

I agree with the above, as long as I keep renting the office from the SMSF and am paying the smsf regular rent.

And if you do decide to leave the business, couldn't you sell it as a going concern? It sounds as if you have a huge amount of good will in there. Wouldn't that mitigate the risk of having a building you buy for the business becoming vacant?

Presumably the risk of the building becoming vacant is the same if you hold it in your name vs holding in an SMSF- the difference being that if it did become vacant you would still be paying SMSF fees. However in the meantime you have saved yourself $15,000 pa (Terry's $21,000 saving less SMSF fees) for a period of years- you've mentioned a minimum of seven years.

The accountant's fees for setting up the smsf, the holding company and bare trust to hold the property come to about 6k. I have been told that this is not tax deductible.

Possibly that's a part of the cost base. But that's $6K spent, a tax deduction would have been only 15% of the $6K- $900. I'd be guessing ongoing fees would be deductible.

As I understand it, when smsf controls the property, the property is held in a bare trust giving it a degree of protection?

Talk to the experts on that. Possibly.

 

[china]

nd if you do decide to leave the business, couldn't you sell it as a going concern? It sounds as if you have a huge amount of good will in there. Wouldn't that mitigate the risk of having a building you buy for the business becoming vacant?

The business is not really sell-able. I am the business ,providing the income generating services with my own two hands and personal labour. Without me there would be no business. This is like a lot of professionals in solo practice as sole trader - surgeons, barristers, accountants

Presumably the risk of the building becoming vacant is the same if you hold it in your name vs holding in an SMSF- the difference being that if it did become vacant you would still be paying SMSF fees. However in the meantime you have saved yourself $15,000 pa (Terry's $21,000 saving less SMSF fees) for a period of years- you've mentioned a minimum of seven years.

Thats correct.

Possibly that's a part of the cost base. But that's $6K spent, a tax deduction would have been only 15% of the $6K- $900. I'd be guessing ongoing fees would be deductible.

Talk to the experts on that. Possibly.

Yes, I am told that the set up fees for the smsf, company, bare trust are all part of the cost base which is not deductible right now but will be useful when calculating any CGT down the track.

 

[geoffw]

The business is not really sell-able. I am the business ,providing the income generating services with my own two hands and personal labour. Without me there would be no business. This is like a lot of professionals in solo practice as sole trader - surgeons, barristers, accountants .

A lot of professionals in solo practice have set up their business in such a way as it can be sold. Perhaps that something you could look at doing. Some, but not all, of the sole traders I know who have done this have business names which are not their own names. Or you could have a slight change- "Mr China & Associates" which keeps the goodwill of your name.

I'm sure there would be people in your profession, who having become newly qualified, would be willing to pay a premium for having an established customer base. And that would be worth an awful lot of money to you. In my business the sale price was typically three times the annual profit. That's an awful lot of money in your pocket- three years of exertion income for doing nothing much more than selling up.

That's not a priority right now of course, but I would have thought it would be worth while checking out.

You mentioned the possibility of expanding. Perhaps you could take on a partner in an enlarged premises, somebody who could buy you out down the track- or even allow you to take some time off in the meantime. You've worked damn hard for a long time- you need to have a break. Believe me, I know.

 

[china]

A lot of professionals in solo practice have set up their business in such a way as it can be sold. Perhaps that something you could look at doing. Some, but not all, of the sole traders I know who have done this have business names which are not their own names. Or you could have a slight change- "Mr China & Associates" which keeps the goodwill of your name.

I'm sure there would be people in your profession, who having become newly qualified, would be willing to pay a premium for having an established customer base. And that would be worth an awful lot of money to you. In my business the sale price was typically three times the annual profit. That's an awful lot of money in your pocket- three years of exertion income for doing nothing much more than selling up.

That's not a priority right now of course, but I would have thought it would be worth while checking out.

You mentioned the possibility of expanding. Perhaps you could take on a partner in an enlarged premises, somebody who could buy you out down the track- or even allow you to take some time off in the meantime. You've worked damn hard for a long time- you need to have a break. Believe me, I know.

Very good points and it is certainly an idea I have been entertaining until the current debacle arrived.

But currently, it is all about business survival and harm minimisation. If the business does not survive this eviction, then there can be no hope of partners, sales or anything.

So if I cannot sort out the empty shell premises close to where I am within the current time frame, (zoning/fitout) then I will be purchasing the fitted out offices 6.5km away.

 

[see_change]

Geoff

Goodwill varies profession to profession and locality .

As a GP in 2770 , I would have been lucky to give my business away asa going concern .

Cliff

 

[Aaron_C]

As a GP in 2770 , I would have been lucky to give my business away asa going concern .

But GPs make the most money when they are based in low socio-economic areas since this is where bulk-billing and high turnover of patients is far more likely.

 

[see_change]

But GPs make the most money when they are based in low socio-economic areas since this is where bulk-billing and high turnover of patients is far more likely.

Common fallacy . GP's make the most in areas where they see private patients and have a high turnover.

But contrary to general opinion , most GP's aren't into high turnovers . There a limit to how many people you can see in one day .

Cliff

 

[Trogdor]

This is a very odd thread.

China - your first problem is you let your lease lapse on a periodic tenancy - this gave the power to your landlord. Why did you not renew it?

Why don't you just go and negotiate a 3 x 3 x 3, or a 5 x 5 with a new landlord? As long as you pay your rent each month and exercise your options that gives you 9 or 10 years of certainty - with no risk of eviction. Somebody may even give you a 5 x 5 x 5 if you push!!

Very simple - you make it out like if you rent again you'll be turfed out on your ear at any time!!

Am I missing something? Otherwise you are rushing frantically to buy something, anything!!

As an aside I never understood why the body corporate on strata titled offices are so insanely high. Pretty scary stuff in a protracted vacancy.

 

[china]

This is a very odd thread.

China - your first problem is you let your lease lapse on a periodic tenancy - this gave the power to your landlord. Why did you not renew it?

Why don't you just go and negotiate a 3 x 3 x 3, or a 5 x 5 with a new landlord? As long as you pay your rent each month and exercise your options that gives you 9 or 10 years of certainty - with no risk of eviction. Somebody may even give you a 5 x 5 x 5 if you push!!

Very simple - you make it out like if you rent again you'll be turfed out on your ear at any time!!

Am I missing something? Otherwise you are rushing frantically to buy something, anything!!

As an aside I never understood why the body corporate on strata titled offices are so insanely high. Pretty scary stuff in a protracted vacancy.

Yes, I let the official lease lapse some years ago. Never really thought about it until I received eviction.

I would rather not go down the leasing situation as I will need to invest in fit out of anything available in the local area. Further more the cost of rental is very similar to that of purchasing.

Yes, I am a distressed buyer - keen to move in quickly for the sake of my business. And yes, I am worried about high body corporates in vacancies.

 

[geoffw]

Very good points and it is certainly an idea I have been entertaining until the current debacle arrived.

But currently, it is all about business survival and harm minimisation. If the business does not survive this eviction, then there can be no hope of partners, sales or anything.

So if I cannot sort out the empty shell premises close to where I am within the current time frame, (zoning/fitout) then I will be purchasing the fitted out offices 6.5km away.

Absolutely, I agree. It's not something you are in any position to do anything about yet.

However the possibility of doing so may influence how you approach your current problem. If a partnership is possible, then it will be worth while for you to take the larger premises. If a sale or partnership is on the books, you may have more peace of mind about buying something.

However, if you are worried about future vacancies, a rental, with a longer term, may be on your wish list. Generally something like a 5+5+5 year lease gives you the right to renew at the 5 year mark. It would be quite some time before you had the possibility of similar happening again.

 

[turk]

China

Have you checked what the relevant legislation for the minimum period to vacate is?

In Victoria where a lease has expired the minimum period is 6 months(retail)

 

[Terry_w]

A lot of professionals in solo practice have set up their business in such a way as it can be sold. Perhaps that something you could look at doing. Some, but not all, of the sole traders I know who have done this have business names which are not their own names. Or you could have a slight change- "Mr China & Associates" which keeps the goodwill of your name.

I'm sure there would be people in your profession, who having become newly qualified, would be willing to pay a premium for having an established customer base. And that would be worth an awful lot of money to you. In my business the sale price was typically three times the annual profit. That's an awful lot of money in your pocket- three years of exertion income for doing nothing much more than selling up.

That's not a priority right now of course, but I would have thought it would be worth while checking out.

You mentioned the possibility of expanding. Perhaps you could take on a partner in an enlarged premises, somebody who could buy you out down the track- or even allow you to take some time off in the meantime. You've worked damn hard for a long time- you need to have a break. Believe me, I know.

I agree with Geoff. There is no reason why a 'sole trader' Dr couldn't make a 'business' that could be sold. Register a catchy name employ some staff and gradually get the clients used to seeing other faces there. Before you know it you are not there but the business is continuing to function.

 

[BayView]

But contrary to general opinion , most GP's aren't into high turnovers . There a limit to how many people you can see in one day .

Cliff

I don't know how you blokes and gals do it....having to listen to whining, moaning sick people (well; some of them are sick) all day long, day in and day out....

My hat is off to you.

 

[see_change]

I don't know how you blokes and gals do it....having to listen to whining, moaning sick people (well; some of them are sick) all day long, day in and day out....

My hat is off to you.

That's what I had in Mt Druitt .

Because of this experience , In my current practice I only give my card with my hours to nice people who don't whinge or whine . I have a practice , the majority of whom are nice people who I can hold interesting conversations with , about the swans , property investing , movies , holidays etc .

A bit like this forum ...

Lots of kids.... Yes very much like this forum ...

Cliff

 

[wylie]

Sorry if this has been mentioned, but China, could you not rent a "room" in an already established medical practice that is local, maybe until you work out where you want to buy (or sign a new lease).

If you need a fit out to suit some sort of medical business, and need car parking, wheelchair access and reception staff, could you not slot into an existing medical place without too much problem? They would have all the car parking, wheelchair access already sorted out.

 

[china]

Sorry if this has been mentioned, but China, could you not rent a "room" in an already established medical practice that is local, maybe until you work out where you want to buy (or sign a new lease).

If you need a fit out to suit some sort of medical business, and need car parking, wheelchair access and reception staff, could you not slot into an existing medical place without too much problem? They would have all the car parking, wheelchair access already sorted out.

This is a good suggestion but doesn't really work out for me. As I really need a permanent address wherein referrers can send people with consistency.

 

[see_change]

I refer to a psychologist who doesn't have an address . Just a mobile number which his clients ring , then he gives them the address.


Cliff

 

[Terry_w]

I refer to a psychologist who doesn't have an address . Just a mobile number which his clients ring , then he gives them the address.


Cliff

That sounds crazy!

 

[Orks]

Surely there are many appropriate places you could lease for your premises? There are thousands of commercial properties for lease at the moment and incentives are running at around 30%. I think you would be crazy to sink nearly $1m into a mediocre property with no CG prospects a fair distance from your current location. What city are we talking?

 

[redwing]

That sounds crazy!

There's a bit of crazy in every psychologist