If you’re a medical practitioner, you stand a chance of reaping immense benefits of incorporation for your practice. If you intend to operate a successful business over the long term, then this is something to consider no matter what stage you are at in your career.
What You Need to Know About Incorporation
Whether you are a physician or dentist in Canada, any health professional could benefit from lower tax rates and better financial security. Plus, it offers you more legal protection against personal liabilities.
When you incorporate your business, you are creating a corporation. This entity is then able to conduct many of the actions a typical business would; such as, paying taxes, taking on contracts, and buying assets.
What are the Benefits of Incorporation?
Due to the added complexity brought to your financial life, incorporation works best under certain conditions. These conditions may include being able to pay out income to others of your family who fall in a lower tax bracket provided they are providing services to the corporation. Additionally, you can save for retirement without having to dispense more of your income to taxes.
Here are more reasons why you should consider incorporating your medical practice. Advantages include:
- Proper allocation of personal and business funds
- Separation of personal and business accounts
- Tax savings on income including pension, health, and death benefits
- Limited liability
- Tax-free sale of shares up to a maximum
- Cheaper non-deductibility
- Possible income splitting subject to the TOSI rules
- Income tax deferral
However, it’s important to note that there are disadvantages to opting for incorporation as well.
- Tax law changes
- Added financial costs
- The complexity of the process
How to Incorporate Your Business
Firstly, add the business name to the Corporate Registry and have your incorporation documents prepared. This will include the number of shares to be issued, the different classes of share, the directors and officers of the company. Finally, a Minute Book incorporating all theses documents should be maintained.
You will also need approval from the College of Physicians and Surgeons to incorporate your medical practice, so have that application drafted as well.
Then, it is time to go back to the Corporate Registry and file the application for incorporation. The College of Physicians and Surgeons will then receive your incorporation documents.
Finally, you will need to have a bank account created for the business and shares procured.
MMT Chartered Professional Accountants Can Help You Incorporate
Under the right circumstances, the benefits outlined are well worth the effort to incorporate your medical or dental practice.
An accountant is able to delve further, provide more in-depth information, and take you through the process of incorporating your practice. Give MMT Chartered Professional Accountants a call today to discuss options of incorporating your business. MMT has offices located in Vancouver and Calgary with professionals ready to assist you.
