Locum Physician Financial Planning

Freedom with financial security

Financial Planning for Locum Practice

Locum tenens practice offers unparalleled flexibility and often premium compensation rates. Review whether incorporation makes sense for your income level and ensure you have proper disability insurance that travels with you.

Understanding tax planning fundamentals and maximizing deductions smooths the financial volatility inherent in locum work.

Locum Planning Priorities

Travel Deductions

Maximize legitimate deductions for travel, accommodation, and meals with CRA-compliant records.

Income Smoothing

Structure cash reserves and corporate retained earnings to manage income variability.

Portable Benefits

Secure individual disability, life, and health insurance that travels with you.

Incorporation Strategy

Evaluate whether a professional corporation makes sense for your work patterns.

Locum Travel Deductions

Expense Category	Deductible %	Requirements
Transportation	100%	Flights, rental cars, mileage to/from assignment locations
Accommodation	100%	Hotels, short-term rentals while on assignment away from home
Meals	50%	Keep receipts; long-haul truckers' rate available for some
Licensing Fees	100%	Provincial licensing fees for each jurisdiction worked
Professional Dues	100%	CMA, provincial medical associations, specialty societies
CME/Education	100%	Continuing education, conferences, required training

Income Management Strategies

Strategy	Description	Benefit
Cash Reserve Fund	Maintain 6-12 months of expenses in accessible savings	Cover gaps between assignments without stress
Corporate Retained Earnings	Leave funds in PC during high-income periods	Defer tax and smooth personal income year-over-year
Assignment Pipeline	Book assignments 3-6 months ahead when possible	Predictable income flow; better financial planning
Diversified Locations	Develop relationships in multiple regions/provinces	Reduce dependency on single market or agency
Rate Negotiation	Negotiate rates based on specialty, location, urgency	Premium rates for remote or urgent placements

Incorporation Decision Factors

Factor	Threshold	Consideration
Annual Income	$150,000+	Incorporation typically beneficial above this threshold
Income Variability	High variance	Corporate structure helps smooth income between years
Personal Spending	< 70% of income	Retained earnings benefit requires saving capacity
Assignment Duration	< 6 months each	Short assignments favor flexibility of sole prop
Multiple Provinces	2+ provinces	PC can simplify multi-jurisdictional billing

Insurance Needs for Locum Physicians

Insurance Type	Priority	Notes
Disability Insurance	Essential	Individual own-occupation policy; not tied to employer
Life Insurance	Essential	Term life sufficient for most; portable between assignments
Critical Illness	Important	Lump sum for treatment; covers income gap during recovery
Health/Dental	Essential	Individual plans or Health Spending Account via corporation
CMPA Coverage	Essential	Maintain for all provinces where you hold licensure
Business Overhead	Consider	Covers fixed costs if disabled; less relevant for locum