When it’s time to start your own practice

Ready to open your own practice? Learn about choosing a location, selecting a business structure and securing financing.

Have you ever dreamed of one day being your own boss?

Whether you’re fresh out of school or you’ve gained some experience working for another professional practice, going out on your own definitely has its advantages.[1] You can enjoy the freedom of a flexible work schedule, a greater share of the profits and the joy of carving out your own unique career path.

If the time to set out on your own is now, you’ll need to be prepared. Some items on your checklist will be to scope out a good location, invest in equipment and possibly hire some employees. You’ll also need to make some key decisions about your business structure and how you’ll fund your practice.

Read on to learn more about these important considerations before setting out on your own.

Sole proprietorship, partnership or corporation?

As a new business owner, you’ll need to register your business with the Canada Revenue Agency (CRA), apply for any local permits or licenses, and check out any regulations set by your governing professional body.

Next, you can decide on the right business structure for your new practice.

You can register as a sole proprietorship, form a partnership with another professional, or set up a professional corporation. There are pros and cons to each option.[1]

  • Sole proprietors are 100% responsible for their business. On the one hand, you get all the profit but you’re also on the hook for any business-related debts. While you may be able to deduct business losses from your income you may end up paying higher taxes than you would as a corporation.[2]
  • Partnership involves two or more professionals teaming up to serve patients or clients under one banner. You will share responsibilities, costs and risks with your partner. A limited liability partnership is usually only available to a group of professionals, such as lawyers, accountants or doctors. You can choose to operate under a trade name (e.g. Moncton Dental Office). On the downside, difficulties may arise from disputes, such as one partner deciding to leave the partnership.
  • A professional corporation can be an attractive structure because it usually allows for tax structuring opportunities among shareholders, potential legal protection against creditors and a lower taxation rate. It does not insulate you from malpractice claims, so be sure to consult with your insurance provider. A professional corporation is also restricted to the rules set out by your governing professional body so be sure to ask your accountant and legal advisor for details. Incorporation can be a costly process, as you’ll encounter more set-up costs than a sole proprietorship and be obligated to file corporate tax returns annually.

You can learn more about various business structures at the Canada Business Network website. A Scotiabank Small Business Advisor can also offer helpful information when starting up your new practice.

Financing your dream

How to fund a new practice weighs heavily on the minds of most professionals just starting out in their careers. For one thing, most students finish their studies with heavy debt loads. And the reality of establishing a practice is that it requires access to substantial capital.

If you haven’t researched common expenses associated with setting up a new practice, you may be surprised by the costs:[3]

  • Opening a practice location (e.g. leasehold improvements, furniture, equipment and salaries): approximately $100,000
  • Setting up a professional corporation: approximately $5,000
  • Buying or leasing a vehicle: approximately $40,000

You can save money with the Scotia Professional Plan (SPP) – featuring low monthly fees, it’s a convenient, all-inclusive package to manage your business banking needs.

Take the next step toward success!

At Scotiabank, our advisors understand the important decision ahead of you.  We’re ready to help you – just as we’ve helped thousands of professionals like you to take the next step in starting their new practice. 

Get more business advice, access helpful resources and learn about available financing solutions by speaking with a Scotiabank Small Business Advisor today.

[1] Every profession has its own rules and guidelines for business structures.  Be sure to consult a legal professional to ensure you comply with your profession’s standards.

[2] Speak to a tax planner to find out how to structure your business.

[3] Costs are examples only.  Your costs may vary.