Medical Professionals Guide to Financial Prosperity

By Debi J Peverill

This book on financial prosperity is intended to give you, the health professional, the tools you need to meet these challenges head on. While you will still require the services of an accountant, this book will help you learn the basics and ultimately save you money. You'll be better informed when you first meet with your accountant and kno

• Language: English
• Publisher: Painless Financial Training Group Inc.
• Release date: Jul 26, 2018
• ISBN: 9780991787258

Book preview

Chapter 1. What Makes Medical Professionals So Special?

What is a medical professional? We are talking about medical doctors, massage therapists, chiropractors, physiotherapists, osteopaths, naturopaths, dentists, etc. The book is intended for medical professionals who are operating businesses, not those who are working as employees. This book is ideal for medical types who do not have a business background.

Just like other business owners, medical professionals are interested in financial prosperity. In order to stay afloat, there are two challenges to contend with: making money and staying out of trouble. This book on financial prosperity is intended to give you the tools you need to meet these challenges head on. While you will still require the services of an accountant, this book will help you learn the basics and ultimately save you money. You’ll be better informed when you meet with your accountant and know which questions to ask.

It is up to you to learn what you need to know to run your practice.

As a self-employed person, it is up to you to learn what you need to know to run your practice. Whether you’re just starting out or you’ve been at it for awhile, this book will give you a leg up, informing you of the tasks you need to perform as required by government and also the perks of being a self-employed person when it comes to your taxes. You’ll never have to say: Gee, I wish someone had told me that sooner, again.

Notes and Doodles

Chapter 2. New Medical Professionals

Congratulations! You have made the decision to work for yourself and have begun an exciting and rewarding journey. There is much that you need to know in order to run your practice. All of the chapters in this book contain valuable information, however this chapter has specific information for those of you just starting out. It’s about how to set off on the right foot and ensure your practice is a success.

Get a Separate Bank Account

One of the first things to strongly consider is setting up a separate bank account for your practice. This does not have to be a business account (as the banks tend to charge more for these)—merely an account that you do not use for any other purpose. Your patients will be paying you with cash, debit and credit cards and with cheques. The cheques you will be getting from your patients will likely be made out to you personally, until you incorporate, so you don’t need a business account, just a separate account. The advantages of a separate bank account are:

•  You can deduct all of the bank charges or interest charged on this account because it is all for your practice.

•  You will be able to find your deductible expenses easily because they are all in this account.

•  If you are audited, Canada Revenue Agency (CRA) will have less reason to look at all of your personal banking activities.

•  Your bookkeeping will take less time and be more accurate.

Make sure to set up the type of bank account that provides you with statements and returns at least a copy of your cheques to you. This is important proof that you have paid your practice expenses. Keep these bank statements and cashed cheques for seven years, as required by CRA. Most bank accounts are now paperless, meaning that you do not get a copy of your bank statement in the mail. It is your responsibility to download your bank statements and keep copies. This can be electronic copy but you have to be sure that you have them, so if you are not printing and keeping file folders make sure that you have good backups.

Use One Credit Card

It’s likely that you will not be writing cheques for all of your expenses. Some of your expenses—such as gas, meals, or medical supplies—may be on a credit card. The same advantages for the separate bank account apply to this recommendation as well. Again, this does not have to be a business card, just a card that you do not use for any personal expenses.

You will need to keep the monthly credit card statements, as well as the individual purchase receipts. The individual receipts give more detail as to what was purchased and must be retained if you ever need to show CRA exactly what was bought and for what reason. For example, if you spend $300 at Staples®, it could be for a printer, office supplies, or an investment in your child’s next year at school. If you’re ever audited, you’ll need to be able to prove what you purchased. And if you do plan to deduct your kid’s school supplies, don’t buy them all at once in September.

Start Keeping Track of Your Expenses Right Away

From now on, whenever you are spending money you need to ask yourself: Is this for my practice? Take a look at Chapter 8 on expenses to see the types of things you can now deduct. If you are setting up your practice in your home and will be using your vehicle for business-related trips, the main areas to first consider are home and vehicle expense. For the time being, keep all of your receipts. Once you have been in practice for awhile, you will know better what to hold on to, but for now keep it all.

Start a Mileage Log

If you are using your car for business, you need to run right out to your vehicle, read the odometer, and write down the kilometre reading. There is an entire chapter on vehicles (Chapter 9), but what you need to know right now is that you will be claiming your vehicle expenses based on the percentage of business driving you do in the year. The only way you can determine this percentage is to know how many kilometres were on your car at the start of your practice and how many you accumulated by the end of your first year, which will be December 31.

By keeping a mileage log, you’ll be able to know how many of these total kilometres were practice-related. The log must be retained, as it is a document that CRA may one day want to look at.

Set Aside a Business Area in Your Home

If you are renting space for your practice in a location separate from your home, and you are not incorporated, then you are not allowed to claim a home office deduction for tax purposes. If you are setting up your practice in your home, here are some things to consider.

As a medical professional, you are entitled to a tax deduction for the operating expenses of the area in your home you use for practice (provided you are showing income from the practice). This area is supposed to be separate from any other place in your home and ideally will be a room. If you cannot set aside an entire room, then you should have some type of partition, which could be as simple as a curtain, to separate the office area from the