Accountant for Physicians in BC
A BC doctor’s income can arrive from fee-for-service billings, health authority contracts, sessional work, locum shifts and private fees, sometimes all in one year. Some of it belongs in a medical corporation and some of it may not. Sorting that out is most of the accounting work.
EverStone CPA works online with family physicians, specialists and medical corporations across British Columbia, on fixed fees confirmed in writing.
Quick answer: Many established physicians practise through a medical corporation, so that income they do not need now is taxed at the lower small business rate until it is paid out. Whether you can, and who may own shares, is set by your college. The main tasks are directing each income stream to the right taxpayer, choosing salary or dividends, and handling clinic overhead and staff.
Physicians we work with
Medical careers change shape every few years, and the accounting has to keep up with each stage.
- Residents and new physicians starting to bill on their own
- Family doctors in group clinics paying a share of billings for overhead
- Specialists with hospital privileges and a private office
- Locum physicians working shifts at several clinics
- Physicians with health authority contracts or sessional payments alongside billings
- Clinic-owning doctors who employ medical office assistants and lease space
Moving into independent practice is the stage where most errors start. Tax is no longer withheld, instalments begin and expenses need a system from the first month.
Practising through a medical corporation
For a physician, the case for a corporation is mostly about deferral and planning. It works when there is income you do not need to spend this year.
What the corporation does
Billings flow to the company, which pays clinic costs and staff. Active business income left in it is taxed at the 11% combined BC small business rate on the first $500,000, shared among associated corporations.
What your college decides
Physicians generally need their college’s permission or registration to practise through a corporation, and the rules on who may hold shares are the college’s. Check your own obligations before acting. We plan within them.
Which income goes in
Not every payment can simply be redirected. Employment income from a health authority stays personal, and some contracts are with you, not your company. We review each contract to see where its income belongs.
Savings inside the company
Surplus can be invested inside the corporation. Passive investment income above a threshold reduces the small business limit, so large portfolios need planning.
Read passive income and the small business deduction and investing inside a corporation. Our incorporated professionals hub collects the related guides.
Salary and dividends from a medical corporation
A medical corporation can pay its physician shareholder a salary, dividends or both. The answer depends on what you spend, what you save and how you want to retire.
When salary helps
A salary creates RRSP room and CPP entitlement, supports a mortgage application and can fund an individual pension plan. It requires payroll and source deduction remittances.
When dividends help
Dividends avoid payroll and CPP contributions, and can be timed to your cash needs. They create no RRSP room, and family dividends are tested under the tax on split income rules.
Planning around the year-end
The mix is set before the corporation’s fiscal year closes. We review it annually, as your billings, family and savings goals change.
Use the salary vs dividends calculator and read RRSP room vs dividends for owners and leaving money in the corporation.
GST/HST and PST for medical practices
Reviewed against your own billing
The GST/HST and PST treatment of a physician’s work depends on what each service is and on the practitioner’s regulated status. Non-clinical work, such as reports, forms, consulting or speaking, can raise its own questions.
We confirm the treatment for each practice instead of publishing a general rule. Email us a list of your income sources and we will confirm it in writing when we review your enquiry.
Medical office assistants, locums and payroll
A physician-owned clinic employs MOAs and sometimes nurses, and may engage locums to cover absences. Each relationship has its own reporting.
MOAs and clinic staff
Employees are paid through payroll with CPP, EI and income tax withheld and remitted. Vacation pay is at least 4%, rising to 6% after five years. T4s are due by the last day of February.
Engaging a locum
A locum is usually self-employed and keeps an agreed share of billings. Put the split, the overhead and who pays which costs in writing before the first shift.
WorkSafeBC and EHT
Register with WorkSafeBC once you have employees. A larger clinic should watch BC Employer Health Tax, which applies once annual BC remuneration exceeds $1,000,000.
Read the BC Employer Health Tax guide and see our payroll services for clinics.
MSP remittances, overhead splits and private fees
Physician bookkeeping is mostly about matching. Billings go out through your EMR, payments arrive from the Medical Services Plan and other payers, and clinic overhead comes off somewhere in between.
Fee-for-service payments
We record MSP and other payer deposits against their remittance statements, so refusals and adjustments show up instead of being lost in the net deposit.
Gross billings, then overhead
Where a group clinic keeps a percentage for overhead, record your gross billings as income and the overhead as an expense. Netting the two hides deductions and understates income.
Contracts and private fees
Sessional and contract payments, insurance reports, forms and uninsured services are tracked by source. That keeps corporate and personal income apart.
Our monthly bookkeeping covers these reconciliations. For background, see why bank reconciliation matters.
Equipment, vehicles and professional costs
Most physicians carry fewer capital assets than a dentist, but the costs still need the right treatment.
- Exam tables, diagnostic equipment and office furniture are claimed through CCA
- Computers and EMR hardware sit in their own CCA class
- A vehicle owned by the corporation and used personally creates a taxable benefit
- Travel between clinics and hospitals is supported by a log
- College fees, professional dues and continuing medical education are deductible to whoever pays them
Before the corporation buys a car, read about the company car taxable benefit and try the vehicle benefit calculator.
Planning points specific to doctors
Mixed employment and practice
A physician can be an employee of a health authority and run a practice at the same time. Each stream follows its own rules, so the return has to keep them separate.
Holding companies
A holding company can sit above the medical corporation to hold surplus, subject to your college’s rules. It adds a return and needs a reason.
Retirement and winding down
Reducing hours, selling a share of a clinic or closing the corporation all have tax consequences. Plan the exit years ahead.
Instalments
Personal instalments apply once net tax owing exceeds $3,000 in the current year and either of the two prior years. New physicians often meet it quickly.
See when a holding company makes sense and closing or selling a corporation.
Year-end checklist for a medical corporation
Send these to your accountant in the weeks after the corporation’s year-end.
- Payer statements for the year. MSP and other remittance summaries, matched to the deposits.
- Overhead statements from each clinic. The gross billings and the overhead taken.
- Contracts and sessional payments. With a note of who the contract is with.
- Investment statements. For any portfolio held in the corporation.
- Payroll and dividend records. Salary paid, dividends declared and any amounts owed between you and the company.
- Asset purchases. Invoices for equipment, computers and vehicles.
- Minute book updates. Dividend resolutions and director changes.
The year-end tax checklist for incorporated owners goes into more detail. The T2 is due six months after the fiscal year-end.
Physician services and fees
- Personal return for an unincorporated physician: commonly $250–$450 with a T2125
- Simple personal return: from $100
- Monthly bookkeeping for a clinic or medical corporation: from $300 a month, GST and PST filing included
- Medical corporation T2 return and statements: quoted after a free consultation
- Payroll for staff and physician salary: quoted with the bookkeeping
- Ongoing planning as a fractional controller: from $1,500 a month
We agree every fee in writing before beginning. Full details are on our pricing page.
Questions from physicians
When should a physician incorporate?+
I work as a locum. What should I track?+
Written and reviewed by a Chartered Professional Accountant at EverStone CPA, an Abbotsford CPA firm working remotely with businesses across British Columbia. Updated . Physicians can read client reviews before getting in touch. See how we write and check pages in our editorial standards.
Related reading
Further reading for physicians and professional corporations.
Send an enquiry
Describe your income sources, whether you already have a medical corporation, and any staff you employ. A Chartered Professional Accountant replies within one business day with next steps and a fixed fee in writing.