00:00:00,100 --> You’ve invested a lot of time, effort and money to become a physician.
00:00:05,860 --> Once in practice, you’ll still have a lot of decisions to make— including whether to incorporate your medical practice.
00:00:11,100 --> On the plus side, incorporating can help save you money.
00:00:14,620 --> On the minus side, a corporation is harder to administer and adds complexity to your financial plan.
00:00:20,190 --> It’s not a decision you have to make on your own. MD Financial Management can help.
00:00:24,710 --> To make incorporating worthwhile, you need to earn more than you spend each year.
00:00:29,260 --> If you can’t afford to leave money in your corporation, then it might not make sense to incorporate.
00:00:34,399 --> Here’s the thing about incorporating your practice: up to $500,000 of your earnings after expenses is taxed at about 13%, depending on your province or territory.
00:00:44,120 --> Compare that with top marginal personal tax rates, which can be around 50%.
00:00:48,500 --> That’s a huge difference.
00:00:50,180 --> If you can keep this money in the corporation after it was taxed at about 13% and let it grow inside your corporate account, you’re enjoying what’s called the tax deferral benefit.
00:01:00,219 --> Eventually, when you take that money out of the corporation, you will have to pay tax on your withdrawals. But you may well be in a lower personal tax bracket when you retire.
00:01:08,780 --> Instead of making taxable withdrawals, you could use this money more effectively for certain business costs like debt repayment.
00:01:15,280 --> So…what are the drawbacks of incorporating?
00:01:19,450 --> Incorporation comes with extra costs and complexity. You’ll have to deal with a lawyer and an accountant.
00:01:26,460 --> And you’ll have to balance the investments in your corporation with the rest of your finances, such as your RRSPs, tax-free savings accounts and insurance.
00:01:35,399 --> MD can help you make the right decision about incorporation because we look beyond the tax-deferral advantages.
00:01:41,380 --> An MD Advisor will discuss the other strategies for building the assets in your corporation, like deciding how to pay yourself and planning your investments.
00:01:49,409 --> We can also help you prepare the right strategies for when you eventually retire and start developing your estate plan.
00:01:55,080 --> Incorporating makes a lot of sense for most physicians.
00:01:58,460 --> The key is to get personalized advice.
00:02:01,369 --> If you have any questions, please contact an MD Advisor.
00:02:04,710 --> Thanks for watching.