Doctors, dentists, and clinics: how professional income is handled
A hospital pays you one way, your own clinic pays you another, and a health plan pays you a third. Here is how professional income holds together across all three.
A doctor can be paid from several directions in a single week: a share from a hospital, cash and card from a private clinic, a cheque from a health plan, and a fee for a talk given at a conference.
Each arrives differently, and some arrive with tax already taken out. Understanding why turns a confusing pile into a manageable picture.
Professional fees are business income, not salary
A doctor or dentist in private practice is not an employee of the patient. You are a professional earning from your own practice, which puts you in the same broad category as a lawyer or an architect: someone who earns on their own account.
That matters because it decides everything downstream. You register in your own name as a professional, you are expected to issue documents for what you receive, you keep records, and you file on your own schedule rather than relying on someone else's payroll to do it.
A doctor who is also employed, for example holding a hospital position with a payroll slip, is in the mixed situation of having both kinds of income at once. Both count, and the employment side does not cover the practice side.
Why some payments arrive smaller than the fee
When an institution pays a professional, it is generally expected to deduct something before releasing the money and remit it in your name. So the hospital share, the health plan cheque, and the corporate speaking fee often arrive with a slice already taken.
That deducted amount is not lost, and it is not an extra charge. It is an advance payment against what you will owe, credited to you when you file, provided you have the document proving it happened.
Which brings up the paperwork that matters most in this field: chase the certificate showing what was withheld from each payment. Without it, you have paid the tax and cannot prove it, which means paying twice. Practices that collect these as they go find filing straightforward. Practices that hunt for them in April do not.
The cash side is where records break
Payments from patients directly, especially in a small clinic, are where record-keeping usually falls apart. Nobody withholds anything, no institution generates a report, and it feels like the honour system.
It is not, for a simple reason: the rest of your practice is documented. Clinic rent, staff pay, supplier invoices, equipment purchases, and the payments from institutions all point to a level of activity. Records that do not match that picture invite questions.
The practical fix is the boring one. Issue documents for what you receive, keep the duplicates, record daily rather than monthly, and keep clinic money separate from household money. A clinic run this way is also far easier to value, sell, or hand to a partner later.
The costs of practice
A practice has genuine costs: clinic rent, assistants, supplies, equipment, professional dues, continuing education, insurance. Which of these can be claimed and how depends on the approach you choose for computing your income, and there is a simpler route and a more detailed route available.
The simpler route trades precision for less bookkeeping. The detailed route rewards good records with a more accurate result. Which suits you depends on how heavy your costs are and how disciplined your records can realistically be, and it is worth deciding deliberately rather than defaulting.
Running a practice and unsure how the pieces fit together? Ask AskOnward for a plain answer grounded in the official BIR rules, so your clinic paperwork stops competing with your patients for attention.
This article is for general information and is not affiliated with the government. For official forms and the latest rules, see the Bureau of Internal Revenue at bir.gov.ph.