Expanding your medical practice by bringing on staff can be an important milestone. But hiring is more than adding another person to your team. It introduces payroll requirements, employment obligations, additional costs, and financial decisions that can influence the future of your practice.
Before making your next hire, Canadian physicians should understand several key considerations.
Get Your Payroll Structure in Place
When you hire employees, your practice will need the appropriate payroll setup. This includes registering for a CRA payroll account, deducting and remitting CPP, EI, and income tax, and making the required employer contributions within the applicable deadlines.
A reliable payroll system or professional service can make these responsibilities easier to manage and help keep your practice organized as your team grows.
Know Whether You Are Hiring an Employee or Contractor
Employee and independent contractor relationships are not interchangeable.
Generally, an employee works within the structure and direction of the practice, while an independent contractor has greater control over how their services are delivered. Incorrectly classifying a worker can create tax and compliance consequences, making it important to establish the relationship properly from the beginning.
Account for Required Employee Entitlements
The true cost of hiring extends beyond salary.
Depending on your province, employment standards may require vacation pay, public holiday pay, and various job-protected leaves. These requirements should be considered when determining the overall cost of expanding your team.
Consider the Broader Tax Impact
Employee compensation, employer payroll contributions, and certain benefit-related expenses may form part of the deductible operating costs of your practice.
For incorporated physicians, however, staffing decisions should not be considered in isolation. Additional expenses and changes in practice cash flow can affect the broader financial strategy surrounding your medical corporation.
Protect Your Practice With the Right Agreements
Clear employment agreements and an understanding of applicable employment standards can help establish expectations from the beginning.
Compensation, responsibilities, workplace policies, and termination provisions should be considered carefully. Proper professional advice can help reduce unnecessary legal and financial exposure as your practice expands.
Build the Practice Without Losing Sight of the Bigger Picture
Growing your team should support more than the immediate needs of your practice. It should fit within the financial future you are building.
At Imperial Lifestyle Management, we work with medical professionals to develop personalized financial strategies around their career, lifestyle, and long-term objectives.
Your practice may be growing. Your financial strategy should grow with it.
Speak with the Imperial Lifestyle Management team to explore how your evolving practice fits into your broader wealth plan.
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