Financial Planning for Incorporated Professionals
Financial planning for incorporated professionals is often two-sided planning for the practice and personal financial planning. A few things to keep in mind for professionals are:
- Professionals are typically in the highest income tax bracket, therefore incorporating their practice can help manage and defer taxes at a lower corporate tax rate.
- By incorporating professionals can have access to dividends from their corporation, shareholder loans, corporately-held life insurance since money can be left inside a corporation, this money can be used in years where there are life changes such as pregnancy, buying a home or retirement.
- Professionals should also ensure that they have access to health benefits.
- Debt for a professional is not unusual, given the costs of education and equipment, therefore working with an advisor and accountant can help an incorporated professional find a way to balance their cash flow.