Business Law
Professional Corporation
Business Law
Professional Corporations Lawyers
If you are considering registering your business as a professional corporation, our
business lawyers at Nanda and Associate Lawyers can assist you with the registration
process and ensure that you are complying with all the relevant laws and regulations at the federal and provincial levels.
What is a professional corporation?
A professional corporation is a registered business entity allowed for certain licensed and well-regulated professionals, such as doctors, lawyers, accountants, dentists, pharmacists, veterinarians, and social service workers. It is crucial that the organization falls under the regulatory supervision of a governing body. For example, if you are registering your law firm as a professional corporation in Ontario, it must be registered with the Law Society of Ontario.
Why opt for the professional corporation business structure?
There are many benefits to registering as a professional corporation.
Tax advantages:
By registering your business as a professional corporation, you can take advantage of many corporate income tax and personal income tax advantages. These tax benefits include tax deferrals and small business deductions. Many of the tax advantages that a general corporation receives will be applicable to a professional corporation as well.
Protection from liabilities to a certain extent:
A professional corporation does not offer the same level of protection from liabilities as a general business corporation. However, the level of protection is much higher compared to a sole proprietorship. A professional corporation structure offers protection to the members from commercial debts and the professional liability of their associates. However, such protection does not extend to any direct liability for negligence or malpractice of any of the members. You will have to take an insurance policy to protect yourself from such professional liabilities.
Succession planning:
Similar to a business corporation, a professional corporation is a separate legal entity distinct from the owners. However, the continued existence of this entity will depend on the regulatory compliance of the professionals in the organization. One obvious advantage is the continued existence of the professional corporation by handing over the reins to the next generation of licensed professionals.
What are the steps involved in setting up a professional corporation?
- Choose an appropriate name for your professional corporation.
Seek the assistance of a business lawyer to confirm that you are not using a name that is already registered or trademarked by any other organization.
- Choose between federal or provincial registration
This will depend on the current scope and scale of your service and your plans to expand it beyond your province in the future.
- Articles of incorporation
You will need to prepare the articles of incorporation and submit them to the appropriate authorities at the federal or provincial level. Our business lawyer will help you with the drafting of the articles of incorporation and any other required documentation.
- Apply for a business number and for the corporate tax number with Canada Revenue Agency.
- Apply for authorization with the authorized regulatory body for your profession in that jurisdiction.
You will have to submit various documents, such as the articles of incorporation and the certificate of incorporation and also pay the required fee.
- Apply for any other permits, licences, and registrations required to start your business operations.
How can our business lawyer help you?
Legal advice and guidance
An experienced business lawyer will guide you throughout the process, starting with assessing whether a professional corporation is indeed the most suitable business structure for your private practice and whether you need to register it at the federal or provincial level.
Assistance with the documentation and registration procedures
As part of the registration process, you will be required to submit a lot of documentation for verification for the registration of the professional corporation and
Help with regulatory compliance
With the professional incorporation of your private practice, your organization will be subject to more regulatory compliance and periodic reporting requirements. Our business lawyers can assist you in ensuring the prompt compliance with such requirements without affecting your business operations.
We Can Help
If you are planning to register your professional service as a professional corporation, reach out to our business lawyers for legal guidance and assistance. Connect with our legal team today to schedule a consultation.
We Can Help
If you are planning to register your professional service as a professional corporation, reach out to our business lawyers for legal guidance and assistance. Connect with our legal team today to schedule a consultation.
Frequently Asked Questions
How is a professional corporation different from a typical corporation?
The main difference between a professional corporation and a standard business corporation is that while both entities are subject to the relevant laws and regulations at the federal and provincial levels. In addition to that, a professional corporation is subject to the additional regulatory compliance requirements of the governing body for that profession. For example, a professional corporation of lawyers is expected to comply with the requirements of the Law Society
What are the advantages of setting up a professional corporation?
- Tax advantages:
By registering your business as a professional corporation, you can take advantage of many corporate income tax and personal income tax advantages. These tax benefits include tax deferrals and small business deductions. Many of the tax advantages that a general corporation receives will be applicable to a professional corporation as well.
- Protection from liabilities to a certain extent:
A professional corporation does not offer the same level of protection from liabilities as a general business corporation. However, the level of protection is much higher compared to a sole proprietorship. A professional corporation structure offers protection to the members from commercial debts and the professional liability of their associates. However, such protection does not extend to any direct liability for negligence or malpractice of any of the members. You will have to take an insurance policy to protect yourself from such professional liabilities.
- Succession planning:
Similar to a business corporation, a professional corporation is a separate legal entity distinct from the owners. However, the continued existence of this entity will depend on the regulatory compliance of the professionals in the organization. One obvious advantage is the continued existence of the professional corporation by handing over the reins to the next generation of licensed professionals.
Are there any drawbacks to registering my business as a professional corporation?
The main drawbacks of a professional corporation are the following.
- As mentioned above, with the registration of your private practice as a professional corporation, your regulatory burden will increase significantly. You will have to comply with much more documentation, periodic reporting, and other regulatory compliance requirements specific to your profession.
- There are limitations to the protection from liability in a professional corporation. You will have to take an insurance policy to protect yourself from professional liability for malpractice or negligence.
Are there any tax advantages of setting up a professional corporation?
Compared to a sole proprietorship, where you will be paying the personal income tax rate on all the income generated from your private practice. By registering as a professional corporation, you will be paying a lower corporate tax rate. Also, you will be able to take advantage of various tax benefits, such as tax deferrals and small business deductions.
Does it make sense to register my private practice as a professional corporation?
Such a decision will depend on the particular circumstances of your business, and it is not possible to generalize without knowing the full details. However, in most cases, you will receive more tax benefits and obtain limited protection from liabilities. Our business lawyers can advise you on whether this is indeed the best option for you based on the requirements of your private practice. Connect with our legal team today for a consultation.
Why are certain professions not eligible to register as a professional corporation?
Only highly regulated professional services, falling under the regulatory supervision of an authorized governing body, are eligible to set up a professional corporation. This is to ensure high standards of professional service and accountability, and also to prevent any misuse of the tax benefits and other such advantages that professional corporations are entitled to. Consult with our business lawyers to confirm your eligibility and any help with the registration process.
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