Professional corporations, retained earnings, and the economics of the practice itself.
The corporation around the professional. The architecture around the corporation.
Physicians, dentists, surgeons, optometrists, veterinarians, allied health practitioners — the professional corporation is, for most of those licensed to use one, the most consequential financial structure of their working lives. The income earned through it is predictable in kind and uncommon in scale. The retained earnings compound inside the corporation, taxed at the small-business rate where the deduction is preserved, and then taxed again when extracted. The clinical practice itself is, in many cases, both an income engine and an asset with a transition value of its own. None of these elements behaves the way the conventional employee balance sheet behaves; almost none of them is composed in concert with the others.
The architectural complications accumulate quietly. Retained earnings drift toward the small-business deduction grind under s. 125(5.1) of the Income Tax Act. Income splitting is constrained by the Tax on Split Income provisions under s. 120.4. Insurance held personally rather than corporately leaks tax efficiency. Practice premises owned in the wrong entity create capital gains exposure at sale. The eventual transition of the practice — to an associate, to a corporate consolidator, to retirement — arrives without the architecture composed for it.
Senatus serves as the architectural mandate that holds the practitioner’s personal, corporate, and clinical position in coherent relation. The CPA who specialises in professional corporations remains the practitioner’s tax counsel. The lawyer who drafts the agreements remains the practitioner’s legal counsel. Senatus convenes the table and remains accountable for the integrity of the whole — through the building years, through the steady years, and through the eventual transition out of clinical practice.
Four reviews the practice tends to defer.
Each is the kind of work that competes with chair time, with patient load, with the next continuing-education obligation. Each, attended to in time, materially shapes the practitioner’s position in the years approaching transition.
Retained earnings, composed against the lifetime arc.
The cumulative position inside the professional corporation is rarely the position the practitioner would have composed for it had they stepped back to plan rather than to earn. Retained earnings, the passive-income line, the small-business deduction grind, the GRIP and CDA balances, and the eventual extraction strategy — all designed against the practitioner’s working horizon rather than fiscal year by fiscal year.
Insurance as foundation, not as adjacency.
For the practitioner whose income depends on capacity, insurance is structural before it is anything else. Disability and critical illness coverage owned correctly, life coverage held corporately rather than personally, key-person and overhead expense coverage where the practice warrants. The architecture funds obligations at the moment they arise — rather than introducing a personal-cash-flow problem on top of a clinical one.
The practice as an asset, not only as an income source.
For most established practitioners, the clinical practice has a transition value — to an associate, to a partner, to a corporate consolidator. The decisions that determine that value are made years before the transition: the share class structure, the goodwill position, the premises ownership, the associate agreements, the patient-record continuity. Composed in time, the practice transitions on the practitioner’s terms; composed late, on the buyer’s.
The transition out of clinical practice.
Retirement is a structural decision before it is a clinical one. The corporate winddown, the post-retirement income strategy from the corporation, the spousal rollover where applicable, the estate position freshly liquid. Coordinated with tax counsel and corporate counsel years in advance — so that the years following the last patient are the years the practitioner planned for, rather than the years they discovered they had not.
The architectural review, then the rhythm of practice.
The engagement begins with a documented review of the practitioner’s position around the professional corporation — the corporate structure, the share classes, the retained earnings strategy, the insurance position, the practice agreements, the personal balance sheet. The review is circulated to the practitioner’s existing CPA and corporate counsel before any work is undertaken.
From that foundation, the relationship operates on the cadence the practice permits: a structural review at year-end, working sessions ahead of consequential clinical or corporate decisions, and continuing coordination across the years that approach transition.
“I had built the practice across four locations over twenty years. The accountant we worked with was excellent at filing the corporate returns. What no one had ever done was to step back and look at the corporation, the practice, the premises, my insurance, and the eventual transition as one architectural position. The first year of the engagement was that review. Everything that followed was easier for it.”
If the professional corporation is the dominant structure of your working life, the next step is a private conversation.
Senatus accepts a limited number of new relationships each year, predominantly through private referral. A member of the Private Office will respond, in confidence, within twenty-four hours.
Request a Private ConversationTwelve adjacent audiences.
Most principals belong to more than one. The architecture is composed for the family in front of us; the descriptions below are how families most often arrive.