2023 year-end planning tips for professional service providers

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.