Medical Professionals

Today’s young medical professionals are in the fortunate spot where they will earn tremendous incomes from day one. The predictability and consistency of your income makes it extremely worthwhile for you to consider some of our tax planning options that are available to minimize your income tax every year.

My wife is a doctor, and I would encourage the same corporate structure for you as I have done for her. Not only would I recommend incorporation for you, but I would also recommend a holding company and a family trust to split income with spouses, extended family members, and adult children. There are even options to use your minor children to split income and significantly reduce income tax.

When asked when the optimal time to incorporate is, I typically answer ‘as soon as possible.’ I had my wife incorporated within a month after the completion of her residency. As a result, we have received a significant amount of savings that would not have been possible without incorporation.

A medical professional should evaluate 3 primary considerations when selecting their accountant:

1. Does this accountant have a portion of his practice dedicated to dealing with medical professionals and keeping current with the tax issues? You will want an accountant who doesn’t deal with medical professionals on a niche level. Rather, you will want an accountant who specializes in working with medical professionals and has a fair amount of experience in doing so. An accountant like this who pays that much attention to the tax related matters of medical professionals will be adequately informed in all things tax that pertain to your needs.
2. What is the age of this accountant compared to you? I would suggest that a young 30 year old medical professional will have a more difficult time in a business relationship dealing with a 55+ year old accountant or advisor than if they found someone closer to himself/herself. You should also consider that if you deal with a 55+ year old advisor, it is almost certain they will be selling/transitioning their practice in the next 5-10 years and you may not be as happy with the person they sell to.
3. What is the availability of the accountant? As a medical professional, your time is easily worth a couple hundred dollars per hour when working. It seems insane to me that you would consider leaving your practice in the middle of day to meet with your accountant. I’d suggest you require that your accountant is able to meet with you after office hours.

Independent business owners in today’s economy need an accountant that can help adapt to changes in tax laws, or to make sure that accurate and timely advice on investments and key decisions are at their disposal. At Nyvall & Associates, we understand the tasking lifestyle of an independent business owner and have years of experience working alongside them to help maximize their financial potential. Thus, that is why our staff prides itself in paying a diligent amount of attention to the needs of all independent business owners. Not only that, but we always aim to look for possible profitable caveats and loopholes independent business owners sometimes don’t have the time, background, and resources to look for.

Independent business owners are commonly unaware of certain prime tax planning options available to them such as the $750,000 capital gains exemption. By making a simple modification to the share structure at incorporation, or recapitalizing an existing business to include spouses or possible children; the $750,000 capital gains exemption will be multiplied and an independent business owner could register a possible gain of $2-3 million dollars without any income tax either on the sale of the business or in the estate on the death of the owner.

If you’re an independent business owner with extensive retained earnings or unrealized capital gains, you may want to consider a corporate earned life insurance policy that could be used to pay the taxes owed upon your death so that your heirs do not have to liquidate assets at distressed prices to the Canada Revenue Agency. A corporately owned life insurance policy can also be structured as a tax planning tool to be used to take retained earnings out of you company on a tax free basis.

There are many different considerations and situations that make no two independent businesses alike. Given that’s the case, as an independent business owner, you deserve an accountant who specializes in working with clients such as yourself and is solely interested the fiscal wellbeing of your enterprise. If your accountant has either neglected to cater to your needs that don’t exceed expectations or doesn’t specialize in accounting for independent business owners; I strongly suggest coming in for an appointment to discuss how Nyvall & Associates can serve as the best accounting firm you’ll ever have. If you’re still hesitant, consider how our initial consultations are both free and no-obligation. Moreover, take into account how our billings are wrapped into a year-end fee as opposed to by the hour. Historically, our independent business owner clients have appreciated this billing system because it doesn’t deter them from randomly asking us any questions about how to handle their finances throughout the year.