Your medical practice is doing well. You’ve worked hard to prioritize patient care while still bringing in a profit, and now you have a surplus of cash that you don’t need to cover day to day operations. While this is exciting, deciding exactly what’s best to do with that extra income can feel paralyzing.
To figure out what to do with the surplus cash in your professional corporation, ask yourself the following questions:
Do I have any short-term business needs for this income?
This could be income, corporate or HST tax installments or a major capital expenditure that would promote essential growth, like new medical equipment. Even if there is no short-term need, you can still invest these excess funds into your business in order to maximize its value, but be sure the funds are easily liquidated when the time comes to use them.
Do I have any short-term personal needs for this income?
If there are no pressing short or medium term business needs for excess income, you can next consider if you have any pressing personal needs for it. This could be paying off personal debts or funding lifestyle expenses like a child’s education or a new mortgage.
What are my long-term goals, and how could this income be best used to serve them?
Finally, if the surplus cash isn’t needed for either personal or business needs in the short term, you can turn your vision to the future. What are your long-term objectives? Are they boosting your retirement savings, enhancing the value of your estate, or having high earnings on financial documents to help with the future sale of your business? And how can this excess income in your professional corporation be best used to work towards these long-term goals?
What are the tax implications?
As a medical professional, you’re paid per visit. You deserve to keep as much of the money you work so hard to earn as possible. That’s why, whether you keep it within the professional corporation or withdraw it for personal use, you need to be aware of the tax implications of excess income. You can read more advice about this in our blog about year end bonuses.
It’s not just about getting the most possible today: it’s about setting you up to achieve your goals tomorrow. Titanium can help you build a sustainable plan so you can keep seeing the rewards of your hard work into the future. Read more about how we help medical professionals achieve their Big, Hairy, Audacious Goals here.