How to structure a medical practice in South Africa: sole practitioner, partnership or company
Doctors usually choose between practising in their own name, in a partnership, or through a company. The right choice depends on professional rules, liability, how much profit you draw and the tax on it, and the tax result is less favourable to companies than many practitioners are told.
In short
- HPCSA rules allow practising alone, in a partnership, in an association, or as a director of a company that meets the conditions of section 54A of the Health Professions Act. Practitioners remain personally liable for their professional services.
- A company that pays all its profit out as dividends costs more tax than a sole practitioner until profit passes roughly R5.8 million, if it is taxed at the standard 27% company rate.
- A company saves tax only on profit left in it. Draw most of it and the saving disappears.
- A company that earns income mainly from the personal services of its shareholders can be excluded from the small business corporation rates.
- Take legal and tax advice together, because the professional rules and the tax rules interact.
What the professional rules allow
The Health Professions Council of South Africa (HPCSA) regulates how a practitioner may practise. Its Business Practices Policy describes a private practice as one run on the practitioner's own account, in solus practice, as a partner in a partnership, as an associate in an association with other practitioners, or as a director of a company approved under section 54A of the Health Professions Act.
Two rules shape every structure.
- Personal liability. Practitioners remain personally liable for their professional services. A company does not remove that.
- Ownership. A person who is not registered under the Act cannot share, directly or indirectly, in the profits of a professional practice. This affects who may own shares, and how service providers are paid.
The HPCSA and your professional indemnity provider have the final word on what is allowed, so check the current policy before you register anything.
The three structures
| Feature | Sole practitioner | Partnership or association | Company |
|---|---|---|---|
| Who is taxed | You, on all the practice profit | Each partner, on their share | The company, then you on what you draw |
| Simplicity | Simplest | Needs a written agreement | Most compliance |
| Liability | Personal | Personal | Professional liability remains personal |
| Bringing in a partner | Awkward | Designed for it | Possible with the right structure |
| Continuity | Ends with you | Depends on the agreement | The company continues |
What the tax does
We compare a sole practitioner with a company, using 2026/27 rates. The company is taxed at the standard 27% rate, because a company earning income mainly from the personal services of its shareholders can be excluded from the lower small business corporation rates. Profit paid out to you as a dividend then carries dividends tax of 20%. The sole practitioner is taxed at personal rates, under 65, less the R17,820 rebate. The comparison ignores salaries and other deductions.
| Profit before tax | Sole practitioner | Company, profit retained | Company, all paid out as dividends |
|---|---|---|---|
| R1,000,000 | R288,293 | R270,000 | R416,000 |
| R2,000,000 | R703,149 | R540,000 | R832,000 |
| R3,000,000 | R1,153,149 | R810,000 | R1,248,000 |
| R4,000,000 | R1,603,149 | R1,080,000 | R1,664,000 |
| R6,000,000 | R2,503,149 | R1,620,000 | R2,496,000 |
| R8,000,000 | R3,403,149 | R2,160,000 | R3,328,000 |
If you take all the profit out, the company only comes out cheaper above about R5.8 million of profit. Below that, the sole practitioner pays less. The company's real tax advantage is on profit that stays in it, for example to fund equipment, premises or expansion.
What a mixed approach can do
Most practitioners neither draw everything nor draw nothing. A company can pay you a salary, which is deductible and taxed at personal rates, and pay dividends on top. That can beat both columns. It needs a model with your other income, your retirement contributions and your medical credits.
The other tax you meet: VAT
Medical services supplied in the course of a practice are generally subject to VAT once you are registered. From 1 April 2026 the compulsory registration threshold is R2.3 million of taxable supplies. See our VAT guide before you decide to register or deregister.
What to do now
- Ask what structure you are in today, and whether it matches what you intended.
- Work out how much of your profit you actually draw each year.
- Get legal advice on the HPCSA and indemnity position for any structure you consider.
- Ask for a model that includes a salary and dividend mix, your other income and your deductions.
- Do not restructure in a hurry. Moving a going practice into a company has tax consequences that need planning.
- Review the structure every few years, and when profit or your plans change materially.
Frequently asked questions
Does a company protect me from a malpractice claim?
Not for your own professional acts. HPCSA rules require practitioners to remain personally liable for their services. A company can help with other risks, such as leases and staff.
Why not use the small business corporation rates?
A company whose income is mainly from the personal services of its shareholders can be excluded from them, and there is a test based on other employees. Ask us to check your position.
What about medical aid credits and retirement contributions?
They reduce a sole practitioner's tax and may change the comparison. Give us your numbers and we can model them.
Sources and further reading
- HPCSA Business Practices Policy, Health Professions Council of South Africa (published extract)
- Can medical professionals be employed by a private facility? (HPCSA ethical rules on juristic persons), Lexology
- May a medical practice trading as an incorporated company register as a SBC?, The Tax Faculty
- Budget 2026 Frequently Asked Questions (personal tax tables, dividends and company rates), South African Revenue Service
- Dividends Tax, South African Revenue Service
This article is general information for South African businesses. It is not tax, legal or financial advice, and it reflects the rules and figures at the date shown above. Tax rules change, so confirm the current position before you act. TBL's practitioners are registered tax practitioners.