Financial planning for therapists and private practice owners

Incorporation can reduce taxes and add flexibility for some therapists, but it isn’t always worth it. A professional corporation may help when your practice earns more than you need to spend personally, letting you leave profits in the corp at a lower tax rate and pay yourself later. It can also allow income splitting in specific cases and enable benefits like an HSA. On the other hand, there are extra costs (legal, accounting, payroll), more admin, and no automatic tax savings if you withdraw all profits as salary. We analyze your revenue, spending needs, family situation, and longterm goals to see if/when incorporation makes sense, then coordinate with your accountant.

There’s no onesizefitsall answer. Salary creates RRSP room and CPP contributions and helps with mortgage approvals. Dividends can be taxefficient and simpler administratively. Many therapists use a mix: a base salary to build RRSP room and stabilize cash flow, plus dividends when profits allow. We model salary vs. dividends, RRSP/TFSA impact, corporate investing, and tax instalments to find the right blend for you in each year.

Use a pay yourself first system. We set a target “owner’s pay” that lands on a set schedule, even if client sessions vary. Income flows into an operating account, then twice a month we sweep funds into buckets: owner’s pay, taxes, business expenses, and profit. This smooths seasonality, reduces anxiety, and keeps you on track for savings goals. We’ll set the right amounts and automate transfers.

If your marginal tax rate is high today and likely lower in retirement, RRSP contributions usually win due to the tax deduction. If your income is variable or you want flexibility, TFSAs are excellent because growth and withdrawals are taxfree. Incorporated therapists can also keep some investments inside the corporation. We’ll compare RRSP, TFSA, and corporate investing based on your income, savings rate, and retirement timeline.

We inventory all debts, interest rates, and cash flow. High interest debt gets priority, but we also balance retirement savings and an emergency fund so you don’t you back into debt. For federal/provincial student loans, we evaluate repayment assistance programs and prepayment options. Then we automate a fixed monthly payoff amount that fits your income seasonality.

A good starting point is 10% of gross income, adjusted for your age, current savings, and desired retirement lifestyle. We factor in CPP, OAS, RRSP/TFSA room, and corporate assets if incorporated. Then we build a simple, evidence based portfolio and a yearly savings schedule that aligns with your cash flow.

If you’re incorporated and don’t need all profits personally, leaving some investments inside the corporation can be efficient. Consider passive income taxation, small business deduction limits, and access to the Lifetime Capital Gains Exemption on business shares. Personally, RRSPs and TFSAs offer powerful tax advantages. We run side-by-side projections to decide the mix and revisit annually.

Most therapists carry professional liability coverage. In addition, consider disability insurance (income protection), term life insurance (for dependents/debts), and sometimes critical illness. If incorporated, review shareholder insurance. We help you determine the right coverage amounts and integrate premiums into your cash flow.

Your 20minute Fit Call is to confirm needs and fit. If we’re aligned, we schedule a 60minute Diagnose meeting to map income, expenses, debt, accounts, benefits, and goals. You’ll leave with priority next steps, a proposal, and full fee details.

Our asset-based fee is 1.5% on the first $500,000, 1.2% on $500,001–$1,000,000, and 1% over $1,000,000. Fees are disclosed in writing before any engagement and billed transparently. Your fee covers ongoing planning, portfolio management, coordination with your accountant, and regular checkins.