Incorporating a Medical Professional Corporation in Calgary

Contact our law firm for your incorporation legal work at 403-400-4092 or Chris@NeufeldLegal.com

A significant number of health care professionals, including doctors, physicians, optometrists, chiropractors and physiotherapists, choose to operate their health care practice through a professional corporation under the Alberta Business Corporations Act and the Alberta Health Professions Act. The incorporation of the professional corporation is undertaken in conjunction with the health care profession's provincial regulatory body, be it the College of Physicians & Surgeons of Alberta (CPSA), the Alberta College of Optmetrists (ACO), the College of Chiropractors of Alberta (CCOA), or such other regulated profession's governing body.

Our law firm routinely advises Calgary doctors, physicians, optometrists, chiropractors and physiotherapists on the establishment of their professional corporation, together with other corporate and legal strategies and structures to optimize the business potential of their professional practice, while limiting their exposure to legal liability and other challenges arising from engaging in their profession and developing their own commercial business. This also means working directly with knowledgeable tax accountants to ensure that the optimal tax and corproate structures are undertaken to advance the professional's long term business objectives.

Advantages of incorporating one's medical practice as a professional medical corporation:

• Significant Tax Deferral - This is the primary reason physicians incorporate. If you earn more than you need for your lifestyle, you can leave the "surplus" in the corporation [see in detail Medical PC Tax Deferral].

  • Lower Corporate Tax Rate: The first portion of active business income is taxed at a much lower rate (the Small Business Deduction) compared to the highest personal tax bracket.

  • Reinvestment: You can reinvest those after-tax dollars into a corporate investment account, allowing for faster growth due to the larger starting principal.

• Remuneration Flexibility - You have control over how and when you pay yourself.

  • Salary vs. Dividends: You can choose to take a salary (which creates RRSP room) or dividends (which can be simpler but don't create RRSP room).

  • Income Smoothing: In lower-income years (e.g., parental leave or sabbatical), you can draw more from the corporation to maintain a steady lifestyle without hitting the highest tax brackets in peak years.

• Limited Liability (Non-Professional) - While a corporation does not protect you from professional malpractice lawsuits, it has the potential to protect your personal assets from:

  • Commercial lease defaults.

  • Trade creditor claims (suppliers, equipment leases).

  • Lawsuits unrelated to your professional practice (i.e., slip-and-fall on the sidewalk leading to your office).

Limitations associated with incorporating one's medical practice as a professional medical corporation (since knowledge enables you to address these limitations):

• Increased Complexity and Cost - A corporation is a separate legal entity, which means more administrative work and costs.

  • Setup Costs: Incorporating your professional medical corporation such that its is approved by your governing body tends to require the engagement of a knowledgeable lawyer and tax professional.

  • Ongoing Accounting: You must file a separate corporate tax return annually, maintain a corporate minute book, and issue T4s or T5s for your pay.

• Professional Liability Remains - This was the trade-off associated with incorporating a professional corporation and attaining the associated tax advantages, with the medical professional not attaining the benefit of the corporate veil with respect to their professional activities, such that you remain personally liable for medical malpractice and negligence. As such, your personal assets remain at risk for any professional malpractice claims that exceed your insurance coverage (which is really no different from undertaking your medical practice in your personal capacity, with no professional corporation).

At Neufeld Legal, we have the experience and insight to assist you in structuring your professional health care practice as a Professional Corporation, whether you are a doctor / physician, chiropractor, physical therapist, optometrist or other permitted professional. As such, when you are looking to incorporating a new Alberta professional corporation* 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 professional corporations in the province of Alberta, 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.

Topics of Interest for Doctors/Physicians: Top Tax Strategies | Professional Corp  |  Individual Pension Plan | Salary vs Dividend | Passive Income | Lifetime Capital Gains Exemption