Incorporation Steps

One of the major distinctions between Professional Corporations and other corporations is the fact the doctor or the dentist is liable in the same way and to same extent as if the business was not incorporated. In other words, a Professional Corporation doesn't offer liability protection to the shareholders the same way other corporations do.

The most significant benefit you can get from incorporating a dental or medical practice is the tax deferral. Personal tax rates are much higher than tax rates for corporations eligible for Small Business Deduction. To maximize the tax deferral benefits you have to retain as much cash-flow as possible in the corporation.

The ultimate tax deferral and saving is achieved when the accumulated corporate earnings are distributed to you in years when your personal income is expected to reduce, such as after retirement. At that time you will pay tax (if any) at much lower personal tax rates, compared with current years when you pay tax at the top marginal rate.

This Chartered Accounting practice has the knowledge and expertise to be recommended as one of the best accountant for doctors / accountant for dentists.

Share structure

Before incorporating, Articles of Incorporation must be submitted to the College of Physicians and Surgeons or the Alberta Dental Association and College for endorsement.

Since March 1, 2010, certain individuals related to the professional have been allowed to hold non-voting shares in the corporation. This is a step forward to harmonize the Alberta legislation with other provinces, however there are few shortcomings:

  • Family trusts for minor children of the doctor or dentist are allowed to be issued non-voting shares. However, the shares must be transferred to the child within 90 days after the child turns 18. This may not be an intended result for those doctors or dentists who want to maintain the control over the child's shares.
  • Spouses are not allowed to be beneficiaries of a family trust that was issued shares of the dental or medical Professional Corporation - your spouse will own shares in your business directly.

A carefully planned share-structure is the key in the incorporation process. Unlike other businesses, professional dental and medical practices present unique tax and accounting challenges and opportunities that need to be addressed by an experienced accountant for doctors / accountant for dentists.

Dental or Medical Practice Permit

A Professional Corporation must have the capacity to practice in the medical or dental field as per the permit issued by the College of Physicians and Surgeons or the Alberta Dental Association and College.

Employment agreements

It is always a good idea to document the employment relationship between you, your spouse and the medical or dental Professional Corporation. The employment agreement lays down the scope of services provided by you and your spouse to the dental or medical corporation and the salaries and bonus entitlements. The agreement is legally enforceable and CRA must take it into consideration when it determines if the salary paid to your spouse was reasonable in the circumstances. Your trusted accountant for doctors / accountant for dentists can provide sound advice regarding employment agreements.

Your trusted Chartered Accountant provides tax and accounting services to doctors and dentists.