Professional Corporations (PC) have been around in Ontario since 1990. In the past, professionals like doctors, lawyers, dentists were not allowed to incorporate by their respective associations.
There were some revolt and discontent among the professionals. Eventually, they were given the right to do so but under certain conditions. Here is the list of the most common questions that we get asked:
- Chartered Professional Accountants
- Health Professionals (Physicians, Surgeons, Psychologists, Dentists, Chiropractors, Chiropodists)
- Social Workers and Social Service Workers
- Opportunity for tax deferral. Similar to other corporations, you will pay a lower tax rate on the first $500,000.
- Non-deductible expenses are less expensive (e.g. life insurance, 50% of meals and entertainment, club dues)
- Protection from creditors (unless you signed personal guarantees)
- Ability to establish pension funds
- Initial work involved in transferring the assets to the corporation
- Unlimited professional liability
- It is a separate legal entity that requires separate set of accounting and tax records.
- You will have to include “Professional Corporation” in the name of your business on all official communication
- Taking funds out of the corporation requires planning and paperwork
- Restrictions on use of holding companies and trusts