Professional Corporations (PC)
What is a Professional Corporation?
Doctors, lawyers, accountants, dentists, chiropractors, registered nurses, massage therapists, social workers, veterinarians, optometrists, pharmacists and other professionals, can incorporate a professional corporation to significantly reduce their taxes.
Since 2000, Ontario has permitted the use of Professional Corporations for several types of professionals. Professional corporations essentially confer to professionals the same tax advantages enjoyed by corporations, such as tax deferral and investment. The only distinction is that professionals are not afforded limited liability that ordinary corporations enjoy.
Why Incorporate Professionally – Reduce your Taxes
Incorporating a professional corporation will allow you to reduce your overall tax burden thereby providing you with greater investment earning capacity on your discretionary income. A professional corporation will enable you to pay tax only on the income that you draw out of your corporation as opposed to all of the income you earn if you were to earn it personally. The remaining funds can be invested in a corporation and can garner a far greater earning capacity than you would otherwise enjoy if invested personally.
If you wish to consider whether a PC is right for you, speak to one of our corporate lawyers at Kalfa Law Firm who can walk you through the advantages or disadvantages of this type of business structure.
If you are considering licensing a PREC, you should also be aware of the restrictions around what kinds of business your PREC is allowed to conduct.
Advantages of a PC
- Receive all of the tax benefits of a corporation which are significant
Disadvantages of a PC
- Personal liability is not limited
- Regulatory requirements to comply with including payment of annual fee to renew Certificate of Authorization
- Cost is $2000 to establish and then about $500/year to maintain in addition to accounting fees
