in the hands of the individual owner. The partnership is the same in that the income flows through to the individuals in proportion to their share of the ownership. Finally, in an incorporated entity, there is a distinction between the com-pany and the owner or owners, as each are deemed individ-ual tax entities. The incorporated business has more options from a tax planning standpoint; however, the cost to establish and maintain a corporation is more than the cost of staying unincorporated – thought has to be given to that fact. Another common mistake that negatively impacts a busi-ness’s cash flow is incorporating too early. Most accountants will suggest that unless you are able to leave a significant amount of money annually in the corporation (typically in excess of $50,000), then incorporation has little to no ben-efit from a tax standpoint. With the recent changes to the tax laws, coupled with the requirement for chiropractors to in-corporate as a professional services corporation, there are few, if any, other benefits to incorporating. COMPENSATION AND RETENTION ® Strong on inflammation, gentle on patients Effective relief of muscle and joint pain, as well as inflammation associated with injuries. Supported by over two dozen scientific studies, Traumeel S is a clinically proven preparation formulated to help regulate inflammation. ® The area of compensation and retention strategies is the fourth area that any business and financial plan must address. There is a fine line between paying too much and paying too little. There is also a fixation on the monetary as opposed to the non-monetary compensation in this area. Likely the largest mistake that employers make in this area, especially small companies, is paying with af-ter-tax dollars for items that should be paid with before-tax dollars, like medical and dental benefits. There are nu-merous strategies to address these costs, but often the employer simply reimburses the expense to the employee, and that, technically, requires it to be deemed salary. Employing such things as a group benefit plan or a private health services plan can change it from salary to a non-tax-able and fully deductible expense. Traumeel S relieves muscle pain, bruising and inflammation associated with injuries such as sprains and contusions, as well as joint pain. ® SUCCESSION PLANNING www.heel.ca www.traumeel.ca 36 Canadian Chiropractor June 2014 The last area that has a significant impact on the cash flow of a business is succession planning. Too often, a business owner thinks that the business can simply be sold when they decide to retire or move to another career. This mistake can end up having drastic negative impacts on the current owner as well as the patients and the employees. Imple-menting a strategy long before the endgame occurs maxi-mizes the value of the business. There are a number of options available to the business owner and all of them tend to deal with money and emotion, which is a potential night-mare. For this reason, I have often recommended that business owners involve more than just a lawyer to put their plan of action into place. Given that each situation is unique, the only mistake to avoid is not addressing this area as soon as you start your business – have your escape route mapped out as soon as you enter and you will never get trapped. The last mistake that is very common in businesses, when it comes to the success of the entity and the flow of money, is failure to revisit everything on a regular basis. Making a review of your business and corporate financial plan a part of your year-end will help you to stay on top. www.canadianchiropractor.ca
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