The Best Company Structure for Doctors in New Zealand

Choosing the right business structure is one of the most consequential financial decisions a doctor makes — and it's one that many medical professionals don't revisit once they've set something up early in their career.

The problem is that the right structure at age 30, just starting out as a locum, is often not the right structure at 45 with an established practice and significant assets to protect.

This guide walks through the three main options available to medical professionals in New Zealand, and the factors that should drive the decision.

As a sole trader, you operate under your own name. There's no separate legal entity — you and the business are the same thing for tax and liability purposes.

Tax: Your income is taxed at personal income tax rates, which top out at 39% above $180,000. For doctors earning above that threshold, this is often the least tax-efficient option.

ACC levies: As a sole trader, you pay ACC levies on your full self-employed income. The classification matters — and many sole trader doctors are misclassified, paying more than they should.

Liability: There's no separation between your personal and business assets. If something goes wrong professionally, your personal assets are exposed (though medical indemnity insurance covers most clinical risk).

Best for: Doctors early in their career with modest income, or those doing occasional locum work alongside a salaried position.

A company is a separate legal entity. You own shares in the company, and the company employs you (or pays you a shareholder salary and dividends).

Tax: The company pays corporate tax at 28%. You then pay personal tax on the salary and dividends you draw. With careful structuring, this can reduce your effective tax rate compared to operating as a sole trader.

ACC levies: A company structure can affect how ACC levies are calculated. Shareholder-employees pay levies on their shareholder salary, not on the company's total profit — which can reduce the levy bill significantly.

Liability: The company provides a layer of asset protection. Your personal assets are generally not at risk for business debts (though banks often require personal guarantees for lending).

Best for: Doctors earning above $100,000 from self-employment, those with significant personal assets to protect, and anyone planning to grow a practice or bring in other practitioners.

An LTC is a hybrid structure. It's a company for legal purposes, but its income and expenses "look through" to the shareholders for tax purposes — similar to a partnership.

Tax: LTC income is taxed at the shareholder's personal rate, not the company rate. This can be advantageous when the company has losses (for example, in the early stages of setting up a practice), as those losses can offset other personal income.

ACC levies: LTC shareholders are treated as self-employed for ACC purposes, which affects levy calculations differently from a standard company.

Best for: Doctors investing in property through a company structure, or those in the early stages of a practice where losses are expected.

At lower income levels, the tax difference between structures is small. As income rises — particularly above $100,000 — the company structure typically becomes more tax-efficient because of the 28% corporate rate and the ability to retain earnings in the company.

If you have significant personal assets (property, investments, savings), a company structure provides a meaningful layer of protection. This becomes more relevant as your career progresses and your asset base grows.

This is often overlooked. Your ACC levy depends on your classification code, which is linked to your occupation and how you're structured. Doctors in certain specialties, or those operating through a company, may be eligible for a lower classification — potentially saving thousands per year.

Are you planning to bring in a partner or associate? Sell the practice eventually? Invest in property through the business? These goals affect which structure gives you the most flexibility.

The most common mistake we see is doctors who set up a company early in their career — often on the advice of a generalist accountant — and then never revisit the structure as their income and circumstances change.

A structure that was set up correctly can become suboptimal over time. The shareholder salary vs dividend split may not have been reviewed. The ACC levy classification may never have been checked. The company may be retaining earnings unnecessarily, or distributing them in a way that's not tax-efficient.

A periodic review — every two to three years, or whenever your circumstances change significantly — is worth doing.

There's no single right answer for every doctor. The best structure depends on your income, your assets, your risk tolerance, and your plans for the future.

What we can say is that the decision is worth taking seriously — and worth revisiting if you haven't looked at it recently.

Talk to us about your structure and whether it's still working for you. We offer a free initial consultation for medical professionals, with no obligation.