Different Business Structures
Group Practices Newer Structures
- Allowing the practice to better attract and retain qualified professionals;
- Eliminating the joint and several liability that is inherent in providing professional services through a partnership;
- Providing a vehicle through which a professional may, if he or she so wishes, provide professional services external to the group practice;
- Increasing business efficiency for each professional by allowing individual management of his or her personal practice;
Peak Earning Years
Introducing Family Members to the Corporation as Shareholders
Existing Professional Corporation
Implementing an Individual Pension Plan (IPP)
An IPP is a defined benefit pension plan that a PC can set up for a professional. It is usually set up for a one individual member but the benefits can be extended to your spouse, if he or she is employed by the PC. In certain situations, an IPP can provide greater annual contribution limits than an RRSP.
Corporate Owned Life Insurance
If you need life insurance, for example to provide income protection for survivors, fund buy-sell agreement or pay capital gains tax on death a corporate-owned tax exempt insurance policy may be the solution. Life insurance premiums are generally not tax-deductible. However it is usually less expensive to fund the policy using after-tax corporate dollars as opposed to after - tax personal dollars.
You have spent considerable time building up your practice and have developed a loyal and profitable patient base. As you approach your retirement years, have you decided what to do with your existing practice?
Selling the Practice
Asset Sale vs. Share Sale
Whether the sale of the practice is structured as an asset sale or share sale will depend on the negotiations between the parties and terms of the contract. For the vendor, the asset sale versus share sae decision will depend on a number of factor including the ultimate after-tax cash amount to be received personally. On a share sale, the after-tax cash to the vendor is equivalent to the net cash retained personally by the vendor, after he or she has paid tax on any capital gains. The vendor's decision will also depend on whether he or she is able to claim the lifetime capital gains exemption (LCGE) to offset all or a portion of the gain on the sale of his or her shares.
For more information on the LCGE and criteria to qualify for the exemption, please speak with us for the Article entitled" Capital Gains Exemption on Private Shares".
Preparing a retirement projection or comprehensive financial plan
The million-dollar question that everyone asks is, "Will I have enough income and saving when I retire so I can live comfortably?" As life expectancies get longer, maintaining a comfortable standard of living throughout your retirement may become more challenging. Give yourself peace of mind and speak to your RBC advisor about preparing a retirement projection for you so you can gain a clearer picture of where you stand today and what changes, if any need to be made in order to reach your retirement goal.