Why Protect?We are the leading financial advisory firm for associate dentists
As an associate, you are a self-employed professional with rapidly rising income potential in the first ten years after dental school. You may enjoy the routine and relatively lower stress of your associateship, or you may be itching to become a practice owner. These are the three points to consider right now.
The right insurance coverage
You probably acquired the building blocks of your insurance portfolio during or right after dental school. Your needs have likely changed, get a second opinion on your coverages - at absolutely no cost.
Start building your net worth
Your future income potential has become real. But you may have significant student debt and you’ll certainly have people offering you competing ideas for how to invest. We’ll help you intelligently build your net worth with a financial plan suitable to your situation.
The career life cycle of a dentist
You may be considering becoming a practice owner now or in the near future. Whether you build or buy, we’ll be there to answer your questions and ensure you transition smoothly.
Solutions for AssociatesWe have what you need
You’re an associate dentist and you’ve probably put some pieces into place already. But are they the right pieces? In the right places? It’s critical to build the proper financial base at the outset of your career and we’ll make sure it’s complete.
Disability Insurance (DI)
After years in school you’re now earning a living. Replacing your income in the event of an illness or injury is essential to ensuring your standard of living is not seriously impacted by an unexpected medical event. DI is the cornerstone of your financial plan and the most important piece to get right.
Critical Illness Insurance (CI)
We all know seemingly healthy people who have been struck with cancer or other serious illness. CI steps in after the diagnosis of a critical illness to help you and your family cope with the financial consequences. With CI coverage there are many variations and options and we know them all.
In case of an early and unexpected death, you may want life insurance for personal reasons, such as paying off a mortgage or replacing income so your family’s lifestyle can be maintained. Or you may be required to obtain life insurance as collateral on a practice loan. Whatever the need, we can help.
As a self-employed individual, you need a cost-effective way to take care of medical bills. Even if you are currently healthy, you need to be prepared. Whether through acquiring health insurance or enrolling in a cost-plus plan such as HealthPlus, we can make sure you ready for the expected, and the unexpected.
Given today’s changing tax rules, it’s important to work with an Advisor who is on top of the situation. Whether to incorporate, how to pay yourself, who should actually own and pay for your insurance coverages.Getting good advice on these decisions can make a significant bottom line difference.
Frequently Asked QuestionsWe have you covered
We’ve helped jump start the careers of thousands of dentists from all across Canada. Working closely with you as a trusted Advisor, we’ll get you quickly on the road to financial success.
Should I incorporate?
Incorporation involves creating a new legal entity, commonly referred to as a PC (Professional Corporation) or DPC (Dentistry Professional Corporation). In Ontario, under RCDSO rules, only dentists can be voting shareholders and only certain non-dentist family members can be non-voting shareholders. Most provinces have similar restrictions. Most of our clients incorporate when they first buy or build a practice, but the question for Associates is whether to incorporate before reaching that stage in your career.
Traditionally, the main financial reasons to incorporate were:
- Tax Deferral and Tax Savings: Since small business tax rates are approximately 25-30% lower than personal income tax rates (depending on your province of residence), retaining money inside of a corporation defers income taxes. Retaining money inside your DPC avoids the personal income taxes that would have been paid if the money was paid as income or dividends. You retain money within the corporation when it would otherwise be taxed at a high personal rate, and withdraw it at retirement when a lower personal tax rate applies.
- Income Splitting with Family Members: Paying dividends to (adult) family members in lower income tax brackets saves tax.
- To open an Individual Pension Plan: An individual Pension Plan (IPP) is a registered defined benefit pension plan funded by corporate assets with the goal of providing post-career income. In a Practitioner’s mid-40’s, IPP contribution rates are higher than Registered Retirement Savings Plan (RRSP) contribution rates, and carry the benefit of allowing additional one time contributions to an incorporated Practitioner’s retirement plan. IPPs are creditor-proof.
- Covering health expenses using a Private Health Services Plan and paying for certain expenses (e.g. life insurance) with corporate dollars.
However, the 2017/18 changes to the taxation of small businesses, have reduced the value of reason 1 and eliminated reason 2. These were the two most immediately impactful tax reasons to incorporate.
Since there are legal and accounting fees associated with initial incorporation as well as ongoing costs, it’s important to consider the return on investment. In other words, is it worthwhile.
As a start, if your earnings are less than $150,000, you would probably end of taking the full amount as annual income from your PC anyway so there is no financial need to incorporate. If you make more than $150,000 but would not expect to leave any income in the corp (i.e. you spend what you make), then most likely you do not need to incorporate (yet). But if you earn more than $150,000 and do not need all of the income to live on, you should speak with us and your accountant.
Item 3, IPP, is something to look at after you turn 40. Eligibility to open an IPP might be the item that tips the balance towards incorporation.
How should I save for my child's education?
Before the 2017/18 tax changes, many professionals used their PC’s to accumulate education savings. The idea was that once the child turned 18, you would pay them dividends to offset education expenses. However, since the changes, that strategy is no longer viable. Although you can legitimately employ your children and pay them a reasonable salary commensurate with their duties, you cannot pay them dividends any more.
Saving for education is best accomplished by opening an RESP and supplementing with TFSA savings.