Benefits of incorporating a medical practice
This article was originally published by The Hamilton Spectator.
Q: I have a dental practice in Hamilton. Should I incorporate?
A: Similar to many other businesses, members of regulated health professions in Ontario (like doctors, dentists, chiropractors, massage therapists, or optometrists) can form a Professional Corporation (PC) to provide their professional services. Simply put, once a PC is created, the medical professional practices as an employee of their PC.
There are many advantages to creating a PC, including:
- Income is taxed at a corporate rate rather than a higher personal rate
- Income can be deferred by holding profits within the PC and paying them out at a later date, which can be beneficial for tax purposes or retirement planning
- Incorporating a PC can provide an option to split income with the PC’s non-voting shareholders, which can include the medical professional’s children, parents, or spouse
- For the most part, commercial liability is limited to the extent of the PC’s assets, thereby protecting the medical professional’s personal assets
While these are important benefits of incorporating a PC, there are other considerations that should be made. Incorporating a PC will not limit a medical professional’s liability regarding malpractice. Incorporating a PC also results brings the added responsibility to ensure the PC’s compliance with corporate law requirements. There are also some costs to consider, including the initial cost of incorporation.
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