Doctors & Dentists
I have developed an acute sense of what it takes to optimize the financials of Doctors and Dentists.
Today’s young Doctors and Dentists are in the fortunate spot where they will earn tremendous incomes almost from day one. The predictability and consistency of your income makes it extremely worthwhile for you to consider some of the tax planning options that are available to minimize the 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 of her completion of her residency and we have achieved significant savings that would not have been possible without incorporation.
A Doctor or a Dentist should evaluate 3 primary considerations when selecting who their accountant and other professional advisors will be:
- Does this accountant have a significant portion of his practice dedicated to dealing with medical professionals and keeping current with the tax issues relevant to Doctors and Dentists?
- 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 himself. You should also consider that if you deal with a 55+ year old advisor it is almost a certainty that 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.
- What is the availability of the accountant? As a Doctor or Dentist your time is easily worth a couple hundred dollars per hour when you are working. It seems insane to me that you would consider leaving your practice in the middle of the day to meet with your accountant. I’d suggest you require that your accountant meet with you after office hours.