Colin Dawson, CPA, CA and Manager with MRSB Chartered Accountants, reviews some key steps to ensuring your practice is optimized for future wealth
Doctors, you have a lot on your proverbial plate. Apart from back-to-back appointments, patients and your own family to tend to, you also have a professional practice to manage. It's understandable that your tax, accounting and bookkeeping demands often sit squarely on the back burner. After all, what's more important: what might happen 10 years from now, or what's happening today?
The truth is, while it might be low on your priority list, proper management of your finances needs to start now if you're to ensure a worry-free, prosperous future. There is unfortunately much evidence pointing to physicians and other medical professionals not having the tools required to properly prepare their practice for retirement, or even to ensure wealth in the here and now.
If you want to start taking the necessary steps toward a secure future, here are a few things to think about - and start working on - to make your ideal retirement a reality:
1. Structure your practice for tax purposes and income splitting
If your practice is incorporated, this offers multiple opportunities to reduce your annual tax burden. A few of the ways you can use corporate structure to reduce taxes are to split unincorporated income with your spouse, keep surplus income in the corporation to take advantage of corporate tax rates, and consider an Individual Pension Plan (IPP). The rules are more complex for incorporated practices, but the benefits usually outweigh the costs.
2. Draft an up-to-date Will
The importance of a current Will & Testament can't be overstated. This is the primary document that determines how your assets will be divided between your spouse, children and other family once you're gone. And if you're thinking, 'I drafted my Will years ago, I have nothing to worry about,' then be aware that recent changes to your marital status and other factors can change or even nullify your Will. Drafting your Will when you have full capacity to do so (not when you're sick or under duress), reviewing the document regularly and updating the terms of your Will in line with your estate plan are all crucial steps. You will also want to involve your lawyer and accountant to make sure your finances, assets and any possible tax issues are discussed.
3. Arrange adequate insurance coverage
There are many types of insurance and each professional has different needs, whether you are a dentist or a psychiatrist. Many providers offer customized insurance packages to meet the specific needs of doctors. Accidental death, disability, lawsuits, critical illness and loss or destruction of documents are all considerations to keep in mind as the owner of a professional practice. The chances of most of these events happening are thankfully quite low, but if the worst happens it will affect not just yourself but your entire business.
4. Keep your billings and financial statements up-to-date
While your Will protects you into the future, up-to-date monthly and yearly financial statements help things go smoothly now. They will allow you to monitor your cashflow and financing needs to ensure that you can not only meet your immediate operating expense requirements (e.g. rent, payroll, supplies) but also any significant future property and equipment acquisitions. Timely and accurate financial records allow you to determine what your true disposable income is and provide your staff with needed financial information, which will aid them in performing their everyday duties (e.g. filing appropriate remittances to CRA, ordering medical and office supplies, maintaning patient accounts). And if there is ever a question as to what was paid and when, the records are at your fingertips, or those of your accountant.
For most medical practitioners, the day to day business aspects of your practice will never be as important as seeing and caring for patients - and this is of course the right approach. But with a bit of attention and planning, you can set your practice up to provide the optimum amount of income and security. You will thank yourself when you finally look back at your years of successful practice and realize you helped not just your patients but yourself and your family along the way.
MRSB Group was thrilled to celebrate the official opening of our new Summerside location yesterday. With comments from the Honourable H. Frank Lewis, Lieutenant Governor of PEI and Summerside Mayor Bill Martin presiding over our ribbon-cutting ceremony, it was an evening to remember. Staff, clients and friends stopped by for some wine and food, getting the chance to tour the Summerside office at the same time.
We would like to officially welcome Cora Lee Dunbar and her team of professionals to the MRSB team. Together we look forward to serving a broader region of Prince Edward Island and providing an even greater level of service to our clients.
The Honourable H. Frank Lewis, principal Cora Lee Dunbar, Mayor Bill Martin and partner Lloyd Compton at the Grand Opening
The Lieutenant Governor share a laugh with Cora Lee Dunbar and provides remarks during the ribbon-cutting ceremony
Mayor Bill Martin addresses the crowd, then presides over the ribbon-cutting ceremony
MRSB partner Lloyd Compton says a few words, as staff and guests enjoy the refreshments
Thanks to everyone who stopped by and took part. It was a great way to celebrate, and we look forward to being part of the Summerside business community!
I recently spent three fantastic days in Montreal attending the 36th annual Canadian Evaluation Society Conference. The conference theme was, 'Evaluation for the world we want' and featured many informative and educational plenary, panel, and presentation sessions from national and international keynote speakers in the world of evaluation.
The conference got me thinking about how evaluation makes a difference and the reasons organizations and governments should conduct or commission this type of work. The decision to evaluate is usually motivated by things like material investment, high risk, innovative approaches, a high political priority or a desire to understand a program and its impacts. Here are a few of the insights I noted from the Conference on how evaluations can make a real difference:
- They can answer basic questions about a program's effectiveness and can be used to improve programs. Program Managers can find out what works and what doesn't. Knowing what works can preserve valuable resources and time. Knowing what doesn't work can assist program managers to make improvements in these areas by fostering critical thinking.
- Evaluation findings can demonstrate to funders and other stakeholders that a program has value and relevance. Sometimes it's hard to see the benefits until they're laid out in clear, objective detail.
- Conducting an evaluation can be useful in understanding issues in programs, assessing performance and identifying areas where additional support (whether in the form of funding or manpower) may be required
- Evaluations can provide a voice for stakeholders and staff to discuss the challenges they face and can offer potential solutions. Not everyone finds it easy to bring up negatives in a team environment; why not let the evaluation start the conversation?
- They can be a useful planning tool for similar programs and projects in the future
- They can provide evidence to support decision making around public policy, program continuation and improvement, replicating projects and developing budgets
- They provide a means of acquiring and providing information to citizens or groups on outcomes expected from policies and programs. This information is often seen as being more objective when it comes from a third party evaluator.
- Evaluations can add credibility and foster better governance by promoting accountability and transparency among stakeholders
How do I think evaluation can make a difference in our professional lives? I believe evaluations provide knowledge, which can lead to social betterment and act as a call to action. A well-executed evaluation encourages stakeholders to plan and reach for better policies, programs and workplaces. And this undoubtedly affects all of us as both employees and citizens.