Financial planning for incorporated professionals is often two-sided- planning for the practice and personal financial planning. A few things to keep in mind for professionals are:
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Professionals are typically in the highest income tax bracket, therefore incorporating their practice can help manage and defer taxes at a lower corporate tax rate.
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By incorporating- professionals can have access to dividends from their corporation, shareholder loans, corporately held life insurance and since money can be left inside a corporation- this money can be used in years where there are life changes such as pregnancy, buying a home or retirement.
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Professionals should also ensure that they have access to health benefits.
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Debt for a professional is not unusual, given the costs of education and equipment, therefore working with an advisor and accountant can help an incorporated professional find a way to balance their cash flow.
Why do you need a Financial Plan?
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Worry less about money and gain control.
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Organize your finances.
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Prioritize your goals.
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Focus on the big picture.
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Save money to reach your goals.
For an incorporated professional, personal and practice finances are connected. Therefore both sides should be addressed: Personal and your Practice.
What does a Financial Plan for an Incorporated Professional include?
There are 2 main sides your practice’s financial plan should address: Growth and Preservation
Growth:
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Cash Management- Managing Cash & Debt
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Tax Planning- Finding tax efficiencies
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Health Benefits
Preservation:
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Investment- either back into the business or outside of the business
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Insurance Planning/Risk Management
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Retirement Planning
What does a Personal Financial Plan include?
There are 2 main sides your financial plan should address: Accumulation and Protection
Accumulation:
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Cash Management – Savings and Debt
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Tax Planning
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Investments
Protection:
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Insurance Planning
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Health Insurance
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Estate Planning
What’s the Financial Planning Process?
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Establish and define the financial planner-client relationship.
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Gather information about current financial situation and goals including lifestyle goals.
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Analyze and evaluate current financial status.
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Develop and present strategies and solutions to achieve goals.
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Implement recommendations.
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Monitor and review recommendations. Adjust if necessary.
Next steps…
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Talk to us about helping you get your finances in order so you can achieve your lifestyle and financial goals.
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Feel confident in knowing you have a plan to get to your goals.