Professional Corporations

Professional corporation lawyers; professioanl corporations; calgary lawyers; business law firm

Professional Corporation Lawyers can save you money.

Professionals Should Incorporate Too!

Many people have heard of professional corporations but do not know what they are. Maybe you have seen the term at your doctor or dentist’s office. Professional Corporation lawyers help set up these specialized companies. Added administrative steps, costs and approvals go into setting up and maintaining the types of companies. It is important to do them right to save money on your taxes legally. Failing to do so, costs people thousands every year. Start saving today and call Kahane Law Office in Calgary, Alberta. We have an  experienced team of lawyers and paralegals to meet your needs. You also receive our renown level of client service. Call 403-225-8810 or email us as below.

Kahane Law Professional Corporation Lawyers

As professional corporation lawyers we know how to properly set up your professional corporation. We work with you and your accountant to do things correctly the first time.  Failure to set them up right can result in the loss of the advantages that they give. In other words, we set up each corporate entity specifically for you. No corporation, professional or otherwise, is a “one size fits all” type of service. Everyone has unique personal, economic, tax and familial needs. In addition, each profession, imparts its own unique rules and regulations.

What Is A Professional Corporation?

Professional corporations are like any other corporation is many respects. They are allowed for and regulated by governing bodies which regulate your industry. For example, the following organizations regulate professionals:  as Colleges of Physicians, Law Societies, Dental Associations, Accounting Associations, Veterinary Associations, etc. These types of corporations exist for a specific reason. Since a corporation cannot hold a medical degree or law degree, the corporation lacks a legal ability to provide those services. A professional corporation allows for an individual doctor or lawyer to provide their services through a corporate entity.

Which Professions Can Operate As A Professional Corporation?

Many different professional associations allow the professionals whom work under them to set up and operate a professional corporation. For example, in Alberta, the following examples exist:

Advantages Of A Professional Corporation

Our professional corporation lawyers review your situation and discuss with you the many possible advantages. We do this in conjunction with you and your accountant. There are many advantages to using a corporate entity as a professional. For example, the following benefits exist:

Professional Corporations For Income Tax Savings

Canadian tax rates for individuals are much higher than the tax rates for professional corporations. Your company pays the lower rate and you pay tax only on the income you draw. With a company, you are also able to take out a dividend which may be taxed at a lower rate than your personal income tax. While professional corporation lawyers should set up the corporation, your accountant helps determine the structure to best optimize tax savings. These structures vary depending on your own unique personal circumstances.

Professional Corporations To Pay Taxes Later

When you earn money as an individual, i.e. you are a dentist without a professional corporation; you are taxes in the year that you earn the money. Conversely, if you incorporate, the government (Federal and Provincial) taxes the corporation at the corporate tax rate (About 10%). When you pay yourself from the company, you pay yourself as a dividend, return of shareholder loan or dividend, etc. If you take money out as income, the amount is deducted from the corporation’s taxes. You then pay our personal tax rate. However, you are able to take out only the money that you need and pay tax on that amount only. Consequently, any money that you do not need, stays in the company and is not taxed at your personal income tax level. Discuss these strategies with your accountant.

Professional Corporations To Income Split

Canada has a graduated tax scale. As you make more money, your tax bracket and tax rate gets higher. With a professional corporation, your corporation can pay income to all employees and dividends to all shareholders (even if that shareholder has no right to vote or control the company). This means that a married couple may be able to pay less tax on the same amount of household income if they are incorporated. Not all professional corporations can do this so speak to our professional corporation lawyers today to find out if your profession qualifies. In addition, the CRA made it harder to income split, therefore discuss this strategy with your account also.

Individual Pension Plan

Individual pension plans are a type of self governed retirement plan. Professional Corporations allow individuals to have Individual Pension Plans for their employees. These may allow higher contribution limits than RRSPs. This allows greater tax savings. In addition, they allow for a top up, deductible from your taxes, if the pension under performs. Finally, professional corporation lawyers work with your accountant to ensure the proper addressing of your tax needs.

Health Spending Accounts

Lastly, setting up a health spending account saves money by using before tax money to pay for medical related costs. A large variety of options exist for health spending accounts so many client chose to utilize this option under their corporate entity. For instance, the spending account may pay for glasses and sunglasses that exceed limits on traditional health benefits.

When Do You Need A Prof. Corp?

This is not an easily answered questions. In the absence of liability protection, it comes down to a matter of taxes. your accountant knows best as to your tax situation. However,  we often hear these two examples as triggers for needed a professional Corporation. The first is if you earn more than $150,000 a year. This amount may be random and is a very rough guild. Secondly, if you make more money than you spend, then a prof corp offers advantages. Again, your account is best to determine this.

A Word About Limited Liability

Talk to our professional corporation lawyers. IN many instances, professional corporations do NOT offer the same liability protection as other corporations. You cannot avoid this as most of the regulations around industry specific professional corporations aim at protecting the public. However, this means that practitioners cannot avoid liability for professional negligence by incorporating. In other words, governing bodies allowed for professional corporations as a way of allowing tax savings but not a way around dealing with problems if you make a mistake professionally. You still require professional insurance for liability protection.

Finding Professional Corporation Lawyers In Calgary, Alberta

The professional corporation lawyers at Kahane Law Office help with your legal needs. We want you to have the information needed to make an informed choice. Therefor, we discuss incorporation advantages with you so you make the right choice for you and your professional business. We also discuss your personal situation and work with your accountant to help maximize your tax savings. CONNECT NOW. We can be reached at 403-225-8810 locally in Calgary, Alberta or toll-free at 1-877-225-8817 or email us directly here.