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:
- 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.
- 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.
- 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.