Transcript - Introduction to medical practice incorporation

December 17, 2018

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.

Previous Article
Transcript - Optimizing your finances as an incorporated physician

Next Video
Estate planning for incorporated physicians
Estate planning for incorporated physicians

If you intend to keep your corporation until the end of your life, it could add complexity to your estate p...

×

Subscribe to our Newsletter

I allow MD Financial Management (including MD Financial Management Inc., MD Management Limited, MD Private Trust Company MD Life Insurance Company and MD Insurance Agency Limited), the Bank of Nova Scotia and other members of the Scotiabank group of companies (“Scotiabank Members”) to send me electronic messages (such as emails and SMS text) about their products and services, offers, events, and other valuable information as well as information about the products and services of other Scotiabank trusted partners that may be of interest to me.  This consent is being sought on behalf of each MD Financial Management and Scotiabank Member which includes any company(ies) or person(s) that form a part of the Scotiabank group of companies in the future. View the MD Privacy Policy here.
!
Thank you!
Error - something went wrong!