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. It is important to do them right to save money on your taxes legally. Start saving today and call Kahane Law Office Calgary, Alberta. We have the experience you need. Call 403-225-8810.
Kahane Law Professional Corporation Lawyers
As professional corporation lawyers we know how to properly set up your professional corporation. Failure to set them up right can result in the loss of the advantages that they give.
What is a Professional Corporation?
Professional corporations are like any other corporation is many respects. They are allowed for and regulated by governing bodies such as Colleges of Physicians, Law societies, Dental Associations, etc. Since a corporation cannot hold a medical degree or law degree, 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?
- Medical Doctors
- Veterinarians (in some jurisdictions)
- Certified General Accountants
- Certified Management Accountants
- Chartered Accountants
- Engineers (in some jurisdictions)
- Architects (in some jurisdictions)
Advantages of a Professional Corporation
Professional Corporations for Income Tax Savings
Canadian tax rates for individuals are much higher than the tax rates for professional corporations. Your company will pay the lower rate and you are just taxed 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.
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 make the money. When you incorporate, you are able to take out the money that you need and pay tax on that amount but any money that you do not need, can stay in the company and not be taxed at your personal income tax level.
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.
Individual Pension Plan
Individual pension plans are a type of self governed retirement plan. Professional Corporations are allowed to have Individual Pension Plans for their employees. These may allow higher contribution limits than RRSPs. This allows greater tax savings.
A Word About Limited Liability
Talk to our professional corporation lawyers. Professional corporations do NOT offer the same liability protection as other corporations. You cannot avoid this. 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.
Finding Professional Corporation Lawyers in Calgary, Alberta
The professional corporation lawyers at Kahane Law Office can help with your legal needs. We will discuss incorporation advantages with you. 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.