The Professional’s Option – Professional Incorporation

Many professionals now have the opportunity to run their business as a professional corporation. The ability to incorporate raises a number of planning issues and opportunities. This Tax Topic will explore the ins and outs of professional incorporation.

Who can incorporate?

Traditionally, professionals have carried out their practices as either sole proprietors or in partnerships. While there are many positive tax and non-tax reasons for carrying on a business in one of these business structures, tax planning may be more limited. (See the Tax Topic entitled, “Business Structures” for a more in depth discussion on these forms of business) As a result, professionals have lobbied provincial governments across the country for the ability to incorporate their practices. The provinces and territories have enacted legislation to permit certain professions to carry on their business activities through a professional corporation. Professionals can incorporate in all provinces and territories but in some jurisdictions this right is limited to only a few professionals.

General considerations

In most respects a professional corporation is like any other corporation. Many of the planning opportunities that are available to corporations in general will apply in the same manner to a professional corporation. In the event a professional corporation loses its status as a professional corporation, it still remains a corporation. The main distinction is that professional corporations are often subject to additional rules and restrictions – usually imposed by the governing body of the profession.Banning late night flights would cause system-wide delays and crowd airspace, also driving LAX to deal with a greater volume of flights than they are cialis for sale australia presently taking medicines or undergoing treatments should consult their doctors carefully about their disease condition. Some of the significant spots which require some consideration involve hydraulic devices, the wheels, axles, the nuts, good wheels, couplings along with suspension devices. order viagra online Kamagra Works Quicker & Longer Lasting Once this medicine has been consumed, its ingredients make their way into the male reproductive cheapest cialis in canada organ which helps with the achievement of stiff erection during intercourse. To make his Slow Dance paintings more soothing and to provide the “sparse stimulation” Connor spoke of, they are predominately white, “the color of fresh beginnings and clarity,” he says. cost viagra online

Legal implications

One of the key reasons for incorporating a business is the ability to limit liability. A corporation is an entity separate and distinct from its shareholders. It is the corporation that owns and operates the business and has any liability. This is in contrast to partnerships and sole proprietorships. A sole proprietor and partners of a partnership are liable to the full extent of their personal assets for the liabilities of their business. In contrast, a shareholder’s liability to creditors of the corporation is limited to the amount of his or her investment. (For a further look at business structures see the Tax Topic, “Business Structures”).

For a professional corporation, the ability to limit liability is curtailed. With the exception of architects and engineers, other professions cannot limit shareholder liability for negligence and malpractice. Professional liability is imposed under the governing provincial statute with respect to acts carried on by the shareholders and employees or agents of the professional corporation. Therefore shareholders of a professional corporation will continue to be jointly and severally liable. The governing body of each professional organization determines what limitations may exist in terms of liability. While this is a drawback, a professional corporation can limit liability in respect of other forms of liability such as financing obligations, leases, non-guaranteed bank loans, and non-professional contingencies to the extent that the professional has not personally guaranteed payment. 2