Most professionals prefer to save time, money and potential liability. The Edmonton professional corporation lawyers at Kahane Law Office help you set up these specialized companies. We have the experience and expertise to properly set up your professional corporation, which also helps you save money on your taxes. Ensuring the proper incorporation is a key factor to these advantages. Call our Edmonton Law firm today at (780) 571-8463.
What Is A Professional Corporation?
A professional corporation allows for an individual professional, such as a doctor or lawyer, to provide services through a corporate entity. It is similar to a corporation, in many ways. Governing bodies such as Colleges of Physicians, Law societies, Dental Associations and more regulate professional corporations.
Professions That Allow For Professional Corporations
In Alberta, many professional associations allow their professionals to set up and operate a professional corporation. For example, these include those professionals who work in:
- Chiropractic wellness;
- Veterinary medicine, in select jurisdictions;
- Engineering, in some jurisdictions; and lastly
- Accounting, including Certified General Accountants, Chartered Accounts and Certified Management Accountants.
How Kahane Law Edmonton Professional Corporation Lawyers Help
At Kahane Law, our professional corporation lawyers have the knowledge and experience to properly set up your professional corporation. With your needs in mind, we set up a corporate entity tailored to make the most of your situation. There are many advantages of setting up a professional corporation, especially when it’s done right. Our lawyers make sure it’s done right so that you gain all the benefits.
Professional Corporation Benefits
If you are a professional, there are many advantages to setting up your own corporate entity. Our Edmonton professional corporation lawyers examine your situation and explain the various benefits. Generally, professionals can:
Delay Paying Taxes With Professional Corporation
If you operate as an individual professional, for example as a lawyer without a professional corporation, you must pay taxes in the year that you earn the money. However, if you incorporate, you take money you need out of the entity and pay tax on that amount. The money not immediately needed stays in the company. This defers personal taxes until you withdraw the funds personally form the company.
Income Split With Professional Corporations
In Canada, as you make more money, your tax bracket and tax rates rise. This is known as a graduated tax scale. When you have a professional corporation, your entity can pay income to all employees and dividends to all shareholders – even if a shareholder has no right to vote or control the company. If you are incorporated, you and your spouse may be able to pay less tax on the same amount of household income. We encourage you to discuss this with our professional corporation lawyers, because not all professional corporations qualify for this benefit. The tax laws around income splitting constantly change. Always work with both your lawyer and accountant to ensure you maximize your tax savings and stay within the law.
Set Up Health Spending Accounts With Professional Corporations
Health spending accounts help you save money by using before-tax money to pay for medical costs. Your company writes off the expense instead of using personal funds to pay the expense. For example, a health spending account often pays for glasses and sunglasses that exceed limits on traditional health care benefits. There are many options for health spending accounts, so many of our clients choose to set them up under their corporate entities.
Save Income Tax With Professional Corporations
In Canada, professional corporations have much lower tax rates than individuals. Your entity will pay the lower rate and you pay tax only on the income you withdraw. In addition, taking out a dividend from your professional corporation, which the government taxes at a lower rate than your personal income tax, saves money. Our professional corporation lawyers help you set up the corporation but we encourage you to work with your accountant to determine the best structure to optimize tax savings.
Establish Individual Pension Plans With Professional Corporations
Professional corporations allow you to set up individual pension plans for your employee, which are a type of self-governed retirement plan. Plans such as these may allow higher contribution limits than with traditional RRSPs and provide greater tax savings. When taking your tax needs into account, professional corporation lawyers work with your accountant to ensure everything is addressed properly.
An Important Reminder About Limited Liability
Please remember: professional corporations do NOT always offer the same liability protection as other corporations. Most regulations regarding industry-specific professional corporations are designed to protect the public, which means practitioners cannot avoid liability for professional negligence by incorporating. Governing bodies allow for professional corporations to exist as a way for their professionals to save taxes, not to brush away professional mistakes or negligence. Talk to the Edmonton professional corporation lawyers at Kahane Law to learn more.
Hiring Edmonton Professional Corporation Lawyers
Kahane Law Office has an experienced team of Edmonton professional corporation lawyers ready to help you with your legal needs. We discuss the advantages to incorporating and help you mitigate your risks. Our goal is to make sure you have all the information you need to make the choice that’s right for you and your business. Call us in Edmonton, Alberta today at (780) 571-8463. You can also reach us toll-free at 1-877-225-8817 or you can email us directly here.