Should a doctor couple set up one or two companies?

For a couple consisting of two doctors, it's sometimes better to set up two separate companies rather than just one. Having two companies maintains the professional independence of both doctors, protects their individual assets and limits risks in the event of personal or professional difficulties. However, a joint company is worth considering if the couple wants to share costs and simplify management, provided they think carefully about situations that could impede the decision-making process and draft the company's articles of association properly. BNP Paribas Fortis helps you gain a greater understanding of the issues so that you make the right decisions.

Main points

• The choice depends on the couple's priorities, their matrimonial property regime, their specialisms and their workloads.
• A joint company simplifies day-to-day management, but could give rise to situations that impede the decision-making process.
• Having two separate companies ensures that each doctor is independent, and protects each doctor's individual assets.
• Setting up a company is worth considering if your average personal tax rate in Belgium reaches 35%.
• The matrimonial property regime has a major bearing on which option – one joint company or two separate ones – is best.

Advantages of a single company

Setting up a single company has undeniable benefits in terms of simplicity and cost.

• Lower initial and ongoing costs. Only one set of start-up costs (fees for legal work, notifications and other formalities) By having a single set of accounts, combined tax returns and joint insurance policies, your running costs will be significantly reduced.
• Simpler admin. With just one set of annual accounts, one corporate income tax return and one contact person at your bank, the company's day-to-day management is easier. Having a centralised accounting department saves you time on admin.
• Shared capital expenditure. The cost of buying medical equipment, fitting out your premises and recruiting care and reception staff is covered by one company with greater resources. For some specialists who require costly equipment, sharing the cost in this way allows them to access high-performance kit.
• Potential tax savings. Having one larger company makes a couple more able to apportion salary and dividend payments in order to minimise the amount of tax they pay, through co-ordinated tax planning.

Risks and limitations of having one joint company

Although a joint company has benefits, don't forget that it also brings risks.

• Problems making decisions. A disagreement could prevent decisions from being taken, which could hold the company back.
• Loss of professional independence. Each decision must be validated jointly, which limits each partner's individual freedom. In terms of admin, each partner could have the authority to act alone, but in that case the other partner must accept decisions without validating them.
• Complexity in the event of divorce. A divorce could bring the company to a halt if the articles of association do not contain provisions to deal with the departure of one of the spouses. The value of shares in the company could complicate the division of assets in the event of separation.
• Dealing with different levels of earnings. Each partner's pay should in principle be proportional to the work they do, which may create tensions.

Advantages of having two separate companies

Although setting up two separate companies is more costly, it's a safe choice.

• Complete independence when making decisions. Each doctor remains free to make their own decisions: how much the company pays them in salary and dividends, how much capital expenditure the company incurs and how much it sets aside as reserves.  This freedom protects each partner's professional life from the ups and downs of their relationship.
• Clear separation of income and responsibilities. Each partner's performance is independent of the other partner's performance. If one of the partners experiences difficulties – falls ill, becomes less busy or has a dispute with a patient – the other partner's company is unaffected.
• Flexibility in terms of managing personal wealth. Each doctor can adjust their strategy to fit their personal situation: put money into a supplementary pension, invest in property via their company, and decide how much to take out as salary and dividends.
• Protection in the event of difficulties. If one doctor makes a mistake or is negligent, liability will only fall on the company concerned (as well as on the doctor, because the medical code of ethics does not allow a doctor to exclude liability if they work via a company). The assets of the other partner are therefore protected.

Conclusion

The decision about whether to set up one joint company or two separate ones depends on multiple factors: your matrimonial property regime, your respective specialisms, your workloads, your attitude to professional independence and your ability to anticipate life's ups and downs.

Although having a single company is cheaper and simpler, it could impede decision-making, potentially preventing the company from operating properly. Having two separate companies, while being a little more costly, provides valuable security and freedom.

Criterion	Joint company	Two separate companies
Cost	Lower	Higher
Management	Simpler	More complex
Independence	Limited	Full
Revenue	Combined	Separate
Risk of impeded decision-making	High	Low
Protection	Low	High
Dealing with a divorce	Complex	Simpler
Flexibility	Low	High
Capital expenditure	Combined	Separate
Continuity	Risk of paralysis	Continuity guaranteed

After you have made your initial choice, the long-term future of your company or companies deserves close attention.

BNP Paribas Fortis helps doctor couples secure their companies by appointing alternate directors to ensure continuity in the event of disability or death, setting up powers of attorney and including exit and valuation clauses in the company's articles of association or shareholder agreement, to plan for events such as death, divorce and retirement.

The professional assistance we provide can also help you devise the best succession plan, ensuring the stability of your medical practice and enabling you to sell it, thereby protecting the wealth you have built up through it.

Decisions like these deserve the right professional support. Make an appointment with your Relationship Manager: together you can assess the solution that's best suited to your situation.

Frequently asked questions

From what level of income is it worth setting up a company?

Setting up a company is attractive if your average personal tax rate in Belgium reaches 35%. You can find your average tax rate on your tax certificate. Below that threshold, the company's set-up and running costs could cancel out the tax benefits.

Can you change the structure after setting up a company?

Yes, you can turn a joint company into two separate companies and vice versa. Those operations (demerger, merger, transfer of a business division) require the input of a lawyer and there are costs attached, but they're an option if your situation changes.

How do you manage joint capital expenditure with two separate companies in Belgium?

Inter-company agreements allow you to share premises, equipment and staff. One company can bill the other for rent and services, but it must do so at a fair market value if you want to avoid a challenge from the tax authorities.

How can partners be protected in the event of professional difficulties?

With two separate companies, one company's difficulties do not affect the other. Having suitable professional liability insurance and setting up a limited-liability company also mean that your exposure in terms of your personal assets is limited to the money you invest in the company.