Incorporation, Tax and Bookkeeping for Doctors | Maple Consults Services Inc.

Start with the honest question

Should you incorporate at all, and should you do it this year? Incorporating costs money to set up and money to maintain, and the benefit only shows up when you are earning more than you spend.

Incorporating usually helps when

Your billings comfortably exceed what your household spends each year
You can leave meaningful profit inside the corporation rather than drawing all of it
You expect that to continue for several years, not one good year
You want to smooth income across the year rather than take it all as it arrives
You are building toward a corporate investment account for retirement

Incorporating often waits when

You are still in residency or your first partial year of practice
You draw essentially everything you earn to live on
You are carrying large student debt you are paying down aggressively
You are about to change provinces, practice type or employment status
Your income is temporarily high but not expected to hold

Incorporating is a tax deferral, not a tax discount. Money left inside the corporation is taxed at a low corporate rate now, and taxed again in your hands when you take it out. The win is the compounding in between, and the control over when income lands on your personal return.

What is included

Incorporation, bookkeeping and tax handled as one engagement rather than three vendors who never speak to each other.

Setting up the corporation

Once, at the start

We coordinate the incorporation with your lawyer, or with an incorporation service where the structure is simple, and make sure the share structure supports what you want to do later rather than boxing you in.

Incorporate now or wait analysis in writing
Share structure and classes reviewed before filing
Family shareholders where they are permitted and useful
CPSO certificate of authorization support
Fiscal year end chosen for maximum first year deferral
Business number and CRA program accounts opened

Getting the practice running

First ninety days

The administrative work that follows incorporation and that nobody warns you about. This is where new corporations quietly acquire problems that surface two years later at year end.

Corporate bank and credit card setup guidance
Redirecting billing numbers into the corporation
Payroll account registration and first remittance
Chart of accounts built for a medical practice
Bookkeeping software set up and connected
Expenses transferred in where they qualify

Bookkeeping, every month

Ongoing

Transactions categorised, accounts reconciled, and a short summary of where the corporation stands. You should never be guessing at your own numbers in November when the compensation decisions are being made.

Bank, credit card and billing reconciliation
Receipt capture without paper
Payroll processed and remitted on time
Shareholder loan account tracked properly
Corporate investment activity reconciled
Monthly summary of profit and cash position

Year end and filings

Annually

Financial statements prepared for filing, the T2 corporate return, slips for everyone paid by the corporation, and the personal returns that have to line up with all of it.

Financial statements for your fiscal year end
T2 corporate return and supporting schedules
T4 and T5 slips prepared and filed
Ontario annual information return
T1 personal returns for you and your spouse
CRA correspondence handled on your behalf

Things that are specific to medicine

A professional corporation for a physician is not a normal company, and a general accountant will not always know where the edges are.

Who can own shares

In Ontario, voting shares in a medicine professional corporation must be held by members of the profession. Certain family members may hold non voting shares, which is a real planning tool but a narrower one than it looks. It has to be set up correctly at the start.

Income splitting is not what it was

Since the tax on split income rules tightened, dividends paid to a spouse or adult child are often taxed at the top rate unless a specific exception applies. Some exceptions still work for physician families. Assuming they apply without checking is expensive.

HST is mostly not your problem

Most physician services are exempt supplies, so there is usually no HST to charge and no input tax credits to claim. The exceptions matter though, and third party medical reports, independent examinations and cosmetic procedures are where doctors get caught out.

Passive income can cost you

Investment income earned inside the corporation reduces your access to the small business deduction once it passes a threshold. It is a slow problem that shows up years after the portfolio was built, so it should be monitored from the start.

Retirement savings change

Dividends do not create RRSP room and do not contribute to CPP. Salary does. That single fact drives a large part of the compensation decision, and it should be revisited every year rather than set once at incorporation.

Two governing bodies, not one

Your corporation answers to CRA and to the College. Certificates of authorization renew, names are regulated, and the corporate record has to stay current. We keep the tax side clean and flag the College obligations that touch it.

The first year, step by step

From the first conversation to your first filed corporate return.

Decide

A written analysis of whether incorporating benefits you now, using your actual billings and household spending.

Structure

Share classes, shareholders and year end date agreed before anything is filed with anyone.

Set up

Incorporation, certificate of authorization, CRA accounts, banking and bookkeeping all in place.

Operate

Monthly books, payroll on schedule, and a compensation plan you can actually follow.

File

Year end statements, T2, slips and personal returns, prepared together and reviewed with you.

Free download

The Incorporated Physician's First Year Checklist

Twenty three things to put in place in the first twelve months of a medicine professional corporation, in the order they need to happen.

The first thirty days after your certificate of authorization
How your year end date changes your first tax bill
Salary and dividend questions to settle before December
What belongs in the corporation and what does not

Send me the checklist

One email. No follow up sequence unless you ask for one.

First name Email

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Incorporation questions doctors ask

How much do I need to be billing before incorporating makes sense?

There is no single number, and anyone who gives you one without asking about your spending is guessing. The real test is how much profit you can leave inside the corporation after you have paid yourself enough to live on and service your debt. If that figure is small, the annual cost of running a corporation eats the benefit. We run the comparison with your numbers before you commit to anything.

What is the certificate of authorization?

In Ontario, a medicine professional corporation cannot practise until the College of Physicians and Surgeons of Ontario has issued a certificate of authorization. It is a separate step from incorporating with the province and it renews. We coordinate the timing so the corporation is able to bill from the date you intend.

Can my spouse own shares?

In Ontario, certain family members can hold non voting shares in a medicine professional corporation. Whether dividends paid on those shares are actually taxed in your spouse's hands at their own rate is a separate question governed by the tax on split income rules, and the answer depends on their age, their involvement in the practice and other factors. The structure and the tax outcome are two different tests and both need checking.

Should my year end be December 31?

Usually not. A corporation can pick any fiscal year end within the first year, and choosing one that is not December can defer tax on your first year of income and give you more room to plan compensation. It also spreads your work away from the busiest filing period. It is one of the cheapest decisions to get right and one of the more annoying to change later.

I incorporated a while ago and the books are a mess. Can you take it on?

Yes, and it is common. We rebuild from bank, credit card and billing statements, sort out the shareholder loan account, file whatever is outstanding in order, and then keep it current going forward. There is no lecture attached to this.

Do you work with physicians outside Toronto?

Yes. Everything runs on secure document sharing and video calls, so location does not matter much. Incorporation support is focused on Ontario professional corporations because the College rules are provincial, but bookkeeping and tax work can be handled for physicians elsewhere in Canada.

Not sure whether to incorporate yet?

That is exactly what the free consultation is for. Bring your billing figures and we will tell you plainly whether it is worth it this year.

Book a consultation