Professions requiring Corporation Permit to Practice

Contact Neufeld Legal PC for your incorporation legal work at 403-400-4092 or Chris@NeufeldLegal.com

Certain professions in the province of Alberta, although requiring specific approvals from the profession's regulatory body and specific drafting for their incorporation documents, are not required to conform to the strict legislative requirements of a professional corporation, with its relinquishment of professional liability as the required concession for incorporation. Nevertheless, professions including engineers, geoscientists, architects and licensed interior designers need to follow specific processes and have their incorporation documents specifically prepared so as to be able to practice their profession through their corporation. Meanwhile, failing to incorporate your professional body in conformity with the profession's regulatory body (i.e., the Association of Professional Engineers and Geoscientists of Alberta, the Alberta Association of Architects).

For those professionals (i.e., engineer, geoscientists, architects, licensed interior designers) that can incorporate without the need of a 'professional corporation, there are significant advantages realizable through a corporation (provided it conforms to the strictures of the profession's regulatory body), primarily related to tax benefits and liability protection.

A. Tax Advantages

Lower Corporate Tax Rates: A major incentive for incorporation is the significant difference between corporate and personal tax rates. In Alberta, the combined corporate tax rate for small businesses is considerably lower than the highest personal income tax rate. By leaving profits in the corporation, you can defer paying the higher personal income tax rate until you withdraw the funds. This allows you to retain more capital for reinvestment or to manage your personal tax bracket.
Income Splitting: Under certain conditions, an incorporated engineer may be able to split income with family members, such as a spouse or adult children, who are in a lower tax bracket. This can be done by paying them a salary for work they perform for the corporation or by paying dividends. This strategy can reduce the overall family tax burden.
Tax Deferral: You can choose when to pay yourself a salary or dividends from the corporation. This allows you to manage your personal income and avoid being pushed into a higher tax bracket in a particular year.
Lifetime Capital Gains Exemption: Upon the sale of the shares of a qualifying small business corporation, you may be able to claim a lifetime capital gains exemption, which can result in a significant tax savings.
More Tax Deductions: A corporation may be able to deduct a wider range of business expenses than a sole proprietorship.

B. Liability Protection

Limited Liability: One of the most important benefits of incorporation is the separation of your personal assets from the business's liabilities. The corporation is a distinct legal entity, meaning that in the event of business debts or legal action, your personal assets (like your home, car, and savings) are generally shielded.
No Liability Statement: Whereas the professional corporations of lawyers, accountants and doctors require the inclusion of a clear and unequivocal liability statement in their articles of incorporation, specifying that those professionals remain personally liable for professional negligence or malpractice, as mandated by their legislation, such a requirement isn't imposed on other professions whose incorporation is not undertaken by way of a professional corporation.

C. Professional and Business Advantages

Enhanced Credibility: Operating as a corporation can lend more credibility to your business in the eyes of clients, suppliers, and financial institutions. The use of Incorporated, Limited, Corporation, or their abbreviations, Inc., Ltd., Corp., at the end of your business name can enhance the commercial commitment and stability of the business enterprise.
Continuity of Business: Unlike a sole proprietorship, which is tied to the life of the owner, a corporation has a perpetual existence. This makes succession planning and the transfer of ownership much simpler.
Access to Capital: Corporations may have easier access to financing, such as business loans, and can raise capital by selling shares (although this tends to be subject to regulation by the profession's regulatory body).

At Neufeld Legal P.C., we have the experience and insight to assist you in structuring your professional practice as a corporation, and meets the requirements imposed by your profession's regulatory body, whether you are an engineer, geoscientist, architect or licensed interior designer, among other professions. As such, when you are looking to incorporating a new Alberta corporation that is subject to the regulations of your profession's regulatory body* or dealing with its ongoing corporate development, you can look to the Calgary, Alberta law firm of Neufeld Legal P.C. Contact us at 403-400-4092 or via email at Chris@NeufeldLegal.com.

* Contact us with respect to rates for corporations in the province of Alberta that are subject to approval of the profession's regulatory body (i.e., APEGA, AAA) and require additional work processing, given that they are not your basic incorporation, as there are additional requirements, fees and work associated therewith; nevertheless, as with any basic incorportion, our charges do not involve other matters that might be corrollary to the incorporation process or might be atypical for incorporation work, including but not limited to related legal or tax advice, engagement with other governmental bodies or professional bodies, licensing, drafting of pertinent business contracts (i.e., shareholders' agreements), negotiations, disputes, financing, coordination with other companies or other legal structuring.

Who can incorporate a Professional Corporation

Click on for more Business Incorporation Videos