The Challenge of Understanding Financial Status

Understanding financial status is a common struggle that hundreds of business owners face, including health professionals like you. You may be on top of tracking your cash-flow and have a full appointment book, but this is not necessarily a clear picture of your financial status.

Whether you are a new health professional or an established one, and whether or not your practice is constantly busy, you need to know your exact income versus operational and fixed costs as well as earnings from investments to know your financial status. Hence, the challenge!

How do you gain clarity on all this and separate it from your personal finances?

Incorporating is the legal process used to form a corporate entity or company. There are many benefits to incorporating, one of which is that it helps you separate your personal finances and business finances, giving you a more accurate picture of your overall wealth.

In this blog, we look at the benefits of incorporating and how it can boost profitability for health professionals.

Short Summary

The Problem: "Not Sure If I'm Making Money"
The Solution: The Power of Incorporation
Lower Tax Rates: A Major Benefit of Incorporation
Treating It Like a Real Business: The Impact of Separate Accounts
Moving Beyond Hope: The Assurance Incorporation Provides
Addressing the Intermingling of Business and Personal Finances
Success Stories from Those Who Chose Incorporation
The Crucial Role of Incorporation in Profitability

But wait, there’s something you need to know first! Grab this FREE guide on Why Incorporating Might Cost You More Than It Saves You In Income Tax, courtesy of Tyagi Group. It’s our way of helping you stay informed and empowered to make the best decisions when it comes to your health business.

The Problem: "Not Sure If I'm Making Money"

There are many reasons you may experience financial uncertainty as a new health professional in Canada. One of them might be that you don’t have a budget in place. A budget helps you keep track of your income, expenses, debts, and financial goals. It’s an accurate record you can review and revisit throughout the year to ease your profitability doubts. Read more about budgeting here.

Another reason for doubts about your profitability could be that your personal finances are blurred with your business finances. If you have not already incorporated your business and are operating as a self-employed individual with just one bank account, you may need to consider incorporating to reduce financial uncertainty.

The Solution: The Power of Incorporation

If you own a health business, it will only legally become a company when it has been incorporated or registered formally with the state and given a registered business name. You will also be given a certificate of incorporation. Until you do this, you will be considered self-employed and legally responsible for any debts the business incurs.

For anyone struggling to gain financial clarity about their profitability, consider incorporation as a solution. This way, you and your business will be separate entities, and your financial status will be crystal clear. Your assets (e.g., your home) will also be protected in the case of the business falling into liability.

Here’s a Glimpse at Some of the Benefits of Incorporation

It allows you to take risks that enable business growth without exposing your personal finances to liability.
Easy transfer of ownership if this ever becomes necessary.
Incorporated businesses often benefit from leniency with tax rates.
It makes your business appear more professional to clients and competitors.
It helps you stay compliant if you have one or more employees.

Lower Tax Rates: A Major Benefit of Incorporation

In Canada, corporations pay taxes just like anyone else. However, when you incorporate your business, you have the added benefit of enjoying lower tax rates for corporations than personal tax rates. You can enjoy these tax savings as long as the money stays in the corporation. So to get lower tax rates with your new corporation, it’s best to seek expert advice from our helpful team at Tyagi Group.

In order to access these benefits, it does take some planning and financial know-how, so check out this guide first, free from Tyagi Group, just for you!

Treating It Like a Real Business: The Impact of Separate Accounts

As a business owner, financial separation is an absolute must. It’s normal to have doubts about this; after all, it IS your business, and you've put your heart and soul into it. It may also seem easier to keep all your money in one account, but separating business accounts will save you bundles of stress in the long run. Non-separation of accounts can lead to confusion and poor financial accountability, especially when it’s time to review your financial statements.

It’s easy to become too relaxed about your business when self-employed. Incorporation forces you to implement financial separation. This will help you and your clients see your health practice in a more credible light as a real business, not just something you love to do.

Benefits of Financial Separation

More efficient accounting.
Easier tracking of business cash flow.
Boost profitability and help you understand your financial status.
Take advantage of business-only financial services.
Protect your personal assets from liability.

Moving Beyond Hope: The Assurance Incorporation Provides

At Tyagi Group, we constantly encourage our clients to let go of the myth that business success comes as a result of wishful thinking. While that would be wonderful, it’s simply not worth it to place all your faith in a stroke of good luck for your health practice to flourish. You’ve spent years studying to become an expert in your field, so why leave your finances up to chance?

Incorporation helps you make the important step of moving beyond hope and beyond seeing your business as a hobby but rather as a professional company that provides a service worth monetary value. Take this step to experience financial assurance and to give your business a solid foundation for financial management now and well into the future.

Addressing the Intermingling of Business and Personal Finances

Business and personal finances are not a match made in heaven. In fact, it’s best to keep these separate and avoid any business-personal finance intermingling for the best financial outcomes. One of the benefits of incorporating is that it encourages financial discipline when it comes to preventing business-personal financial intermingling. With a formally registered business, you will have no choice but to use separate bank accounts and keep your personal finances separate from all business cash flow.

Success Stories from Those Who Chose Incorporation

There are heaps of incorporation success stories out there about health professionals who have chosen incorporation over the alternative of financial uncertainty. But don’t just take our word for it; see for yourself.

A valued client of Tyagi Group, Dr. Alex Dragan, ND, went so far as to say that incorporating their naturopathic business in Canada has taken them one step closer to their goals. They admitted that after incorporation, they could suddenly see a clear distinction between their business and personal finances. The best part was that they didn’t have to muddle through it alone. They had continuous support from Cas and the team at Tyagi Group, as well as their lawyer.

“I can now make more clear financial goals for my business and have a defined budget going forward!” they said in their client testimonial. Like Alex, you could be sharing your success story in our client testimonials too. Take that step now and incorporate your health business with our help.

The Crucial Role of Incorporation in Profitability

In summary, you have great potential for profitability through incorporation as a health professional in Canada. Here’s a recap of how incorporation helps you understand and boost your profitability:

Separation of personal and business finances.
Take advantage of tax benefits from incorporation.
Easier tracking of cash flow.
Better financial management and accounting.
Gives your business a more credible perception in the eyes of clients and competitors.

To know more about profitability through incorporation and other business basics related to incorporation, sign up for our Business Foundations Incorporating Online Course for Canadian Health Professionals. Click below to explore!