Strategic Withdrawals & Cash Flow

If you're an incorporated physician, you already know the drill: money comes into the corp, you pull a salary and/or dividends, and then like clockwork you get hit with a tax bill at year end. Rinse and repeat!

But here's what most of us were never taught: as your corp grows, that "pull a dividend, pay the tax" cycle gets a lot more complicated and requires more strategic oversight. Once you have multiple types of sizeable investments inside your corporation (think stocks, bonds etc), you actually have more than one dividend pool to choose from. And some of those dividends are cheaper than others.

The problem? The question never seems to go beyond “Salary versus Dividend?” and most physicians have no idea that there are multiple dividend sources nor that the choice of dividend is being made on their behalf.