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2023 year-end planning tips for professional service providers

2023 year-end planning tips for professional service providers

Synopsis
3 Minute Read

Get ahead of year-end challenges with our tips for professionals. Explore insights on tax planning, insurance coverage, and effective risk management strategies that can help take you to new levels in the new year. Discover the benefits of the Canadian Digital Adoption Program and leverage MNP Digital’s expertise for a seamless digital transformation of your practice.

Partner, Taxation Services
National Team Leader, ExitSmart
Senior Manager, Forensics

As a busy professional, the year-end can be daunting, with ever-changing requirements and tasks. However, it’s also a great time to take a step back and evaluate your professional goals — and the necessary adjustments to help get you there.

Here, we outline several benefits, resources, and tips to help set you and your practice up for a successful new year.

Tax

Charitable donations

Proposed changes to the Alternative Minimum Tax (AMT) may take effect starting January 1, 2024. These changes have the potential to impact high-income philanthropists. You may be better off making sizable charitable donations before the end of this current year to maximize the tax benefits.

First Home Savings Account

Whether you’re a new grad just starting or are simply looking to take a step toward purchasing your first home, the tax-free First Home Savings Account (FHSA) is a new option in 2023 that you should consider.

Contribution room for eligible individuals (residents of Canada who are at least 18 years of age) will only start accruing once you’ve opened the account, so it’s important to act quickly. Opening this account before the end of the year, even if you cannot make contributions, will allow you to take advantage of the $8,000 contribution limit next year.

Multigenerational Home Renovation Tax Credit

The Multigenerational Home Renovation Tax Credit (MHRTC) can assist homeowners with the cost of creating a secondary unit in your home. Renovations or additions to the home must be to create a self-contained unit with a private entrance, kitchen, bathroom, and sleeping area for a qualifying relative to live in. The refundable credit is 15 percent of qualifying expenses to a maximum of $50,000 (maximum $7,500 credit).

Tax instalments

Are you currently making payments toward tax installments personally or for your practice? Be sure you meet this year’s deadline. Any late payments will incur large amounts in interest and potential penalties.

Insurance

Insurance coverage review:

All professionals, especially those who manage a practice, will benefit from a comprehensive year-end review of your insurance coverage. A skilled advisor can assess coverage limits and values and ensure policies align with your needs and risk exposures.

Following are two types of insurance we recommend all professionals and practice owners consider:

  • Errors and omissions

This professional liability coverage is a vital safeguard against potential claims of inadequate work or professional negligence. It offers financial protection and can help fund legal support in the event of such claims.

  • Commercial general liability

This coverage is potentially worthwhile if you operate a professional practice in a commercial building. It provides a comprehensive safety net against property-related risks and general liabilities that may arise on the business premises.

Risk Management

Financial planning

Take time to create or review an existing financial plan. This will help you benchmark where you are now, identify your goals, and determine the necessary steps to achieve them.

Step one is to analyze your income, expenses, investments, and potential opportunities. Then, work with an advisor to develop a robust financial roadmap that guides your practice toward long-term success.

Contingency planning

An emergency or contingency plan protects your practice by addressing potential risks and uncertainties that could impact your ability to manage daily operations or make critical decisions. By putting measures in place, you can effectively manage these risks and ensure your practice can function smoothly, even in unforeseen circumstances.

Value protection

How much of your practice’s value depends on your goodwill and leadership? Regardless of when you’re planning to sell or retire, a succession plan can help to protect the value of your practice and provide peace of mind to your family and business partners.

A formalized plan protects the value of your practice if you can no longer participate in its day-to-day operations. It also ensures you have options as economic conditions and life circumstances change.

Digital

Canadian Digital Adoption Program

The right digital tools can alleviate financial and operational constraints and unlock resources for your practice to pursue new opportunities. While there is a considerable cost to embracing new software and upgrading your practice technology, the Government of Canada has made it considerably more accessible for small and mid-sized practices.

The Canadian Digital Adoption Program (CDAP) offers up to $15,000 in government grants to make this step much more achievable for small to medium-sized businesses. This investment will allow you to work with a digital advisor to create your digital transformation roadmap. You may also qualify for up to $100,000 in interest-free loans to put this plan into action.

Eligible CDAP expenses include a wide range of technologies that can directly benefit professional practices — it’s worth looking into regardless of where you are on your digital transformation journey.

If CDAP is something you’re considering, we recommend reaching out to an MNP Digital Advisor to learn more. Whether you are looking to enhance your cyber security, implement new digital platforms, or improve your operating efficiency, they can help you prioritize your next steps and improve your practice’s performance.

We're here to help

Our experienced team at MNP is ready to help you achieve your goals for your practice, no matter what stage you’re at.

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