Should a doctor incorporate? Professional corporations for physicians and dentists

Practice income is largely predictable. The tax outcome is not. Physicians, specialists, dentists and allied health professionals come to us with the same question realtors do, in a different setting: should I incorporate? And the same honest answer applies: it depends on your numbers, and we model them before you decide.

When a professional corporation defers tax meaningfully

If you consistently earn more than you spend personally, a professional corporation can defer tax meaningfully. The income that stays inside the corporation is taxed at corporate rates, and the personal tax arrives when you pay yourself. If you take out everything you earn, the deferral is small and the corporation adds filings. That is the whole decision, and it is a numbers exercise rather than a matter of opinion.

You incorporated but nothing changed

This is the most common situation we inherit. A professional corporation only saves tax if compensation is planned. Left to default, the owner draws what is needed, the accountant files a T2 and a T1 at year-end, and the structure delivers almost nothing. We set the salary and dividend mix, the RRSP room strategy and the retained-earnings plan deliberately, and we have that conversation before December rather than after.

Associate payments are messy

Multi-provider clinics add a second layer: associates. We structure associate splits, overhead recovery and reporting so each provider's economics are clear and defensible. Associate payments and contractor reporting sit alongside staff payroll in the clinic books, and both need to be right for the owner to see what the clinic actually earns.

Mixed taxable and exempt revenue

Core medical services are HST exempt. Cosmetic and non-insured services can be HST taxable. A clinic with both has to map revenue correctly and manage the input tax credit restrictions that follow. This is a configuration job at the point of sale and in the chart of accounts, done once and kept clean monthly, not a year-end reconstruction.

Equipment and expansion

Dental and medical equipment purchases bring CCA planning. A second location brings expansion and second-location modelling, and cash flow for clinic operations becomes a forecast rather than a bank balance. These are the points where a clinic benefits from reporting built for decisions, not just compliance.

Clinic payroll

Staff and hygienists need employee setup, payroll runs, remittances, T4s and ROEs on schedule. Payroll for up to five employees is included in our Business plan; larger clinics are priced into the Growth and Finance Team plans.

Who this applies to

We work with physicians, specialists and medical professional corporations, dentists, optometrists, physiotherapists, chiropractors and multi-provider allied health clinics. The structure is the same across them: the corporation, the clinic books and the compensation plan managed together so more of your billing survives the year.

What a clinic engagement covers

• Medical and dental professional corporation accounting
• Clinic bookkeeping
• Payroll for staff and hygienists
• Physician and associate compensation
• Equipment purchases and CCA planning
• Tax planning and instalments
• HST on taxable versus exempt clinic revenue
• Cash flow for clinic operations
• Clinic expansion and second-location modelling
• Associate payments and contractor reporting
• Owner compensation and dividend planning

Three things to bring to the first conversation

You do not need statements or documents for the first call; we never ask for confidential documents on a web form, and secure upload happens after onboarding. What helps is a rough answer to three questions. How much do you bill, and how much of it do you need personally each year? Do you pay associates or staff, and how? Does the clinic sell anything that is not core medical care, such as cosmetic or non-insured services? Those three answers tell us whether a professional corporation defers tax meaningfully, how messy the associate economics are, and whether HST mapping needs attention.

If you already have an accountant

We handle the transition: prior-year files and CRA access requested, the last filings reviewed, and anything that needs correcting flagged before we take over. For incorporated professionals the review usually starts with whether compensation has actually been planned or simply drawn.

Dentists and allied health are not an afterthought

The same structure applies to dentists, optometrists, physiotherapists, chiropractors and multi-provider allied health clinics. Hygienist payroll, equipment purchases and a higher share of taxable services change the weighting of each item, not the list itself.

What we do and do not do

We handle the professional corporation setup through our business formation service, the clinic bookkeeping, payroll, tax planning and instalments, HST on taxable versus exempt revenue, and the corporate and personal returns. We do not provide audit or assurance engagements, and shareholder agreements and legal opinions come from your lawyer.

What it costs

Monthly accounting starts from CAD 299 per month and is priced on transaction volume, payroll, entities and complexity. Most owner-operated clinics fit the Business plan, from CAD 599 per month, which includes payroll for up to five employees, a quarterly review call, salary versus dividend planning and CRA correspondence handling. We confirm an exact fixed price in writing after a short review of your numbers.