Time, money, and potential liability are factors that most professionals prefer to save. The professional Edmonton corporate lawyers at Kahane Law Office can assist you in forming these companies. We have the experience and expertise to properly set up your professional corporation, enabling you to save money on taxes as well. A key component of these benefits is ensuring the proper incorporation.
Who Are Professional Corporations?
A professional corporation enables an individual professional, such as a doctor or lawyer, to deliver services through a corporate entity. They are similar to corporations in many ways. Professional corporations are governed by organizations such as colleges of physicians, law societies, dental associations, and more.
Professional Corporations in Certain Professions
Several professional associations in Alberta allow their members to establish and operate professional corporations. Examples include professionals in the following fields:
- Architecture;
- Chiropractic wellness;
- Veterinary medicine, in select jurisdictions;
- Law;
- Dentistry;
- Medicine;
- Optometry;
- CPAs, Chartered Accountants, and Management Accountants.
How Kahane Law Edmonton Lawyers Help Professional Corporations
We at Kahane Law have the experience and knowledge to properly set up your professional corporation. In order to take full advantage of your situation, we set up a corporation tailored to your needs. Establishing a professional corporation has many advantages, especially when done correctly. So that you receive all the benefits, our lawyers make sure it’s done correctly.
Corporations benefit from professionalization
There are many advantages to forming your own corporation if you are a professional. Edmonton professional corporation attorneys examine your situation and explain each benefit. These include:
Delay Paying Taxes With Professional Corporation
You must pay taxes in the year that you earn the money if you are an individual professional, such as a lawyer without a professional corporation. Incorporating, however, allows you to take money from the entity you need and pay taxes on that money. You keep the money you don’t need immediately. This defers personal taxes until you withdraw the funds personally from the company.
Professional Corporations and Income Split
Tax brackets and tax rates rise as you earn more money in Canada. This is called a graduated tax scale. A professional corporation has the ability to pay income to all employees and dividends to all shareholders – regardless of whether the shareholder has the right to vote or control the company. Your spouse and you may be able to pay less tax on the same amount of household income if you are incorporated. We encourage you to discuss this with our professional corporation lawyers since not all professional corporations qualify for this benefit. Tax laws regarding income splitting are constantly changing. Ensure you maximize your tax savings and remain within the law by working with your lawyer and accountant.
Getting Professional Corporations to Set Up Health Spending Accounts
Spending money from your health spending account before tax can help you save money on medical expenses. As opposed to using personal funds, your company writes off the expense. An HSA often pays for glasses and sunglasses that are beyond the limits of 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.
Corporations Save Taxes
A professional corporation has a much lower tax rate than an individual in Canada. The entity pays the lower rate, while you pay tax only on the income withdrawn. You can also save money by taking dividends from your professional corporation, which are taxed at a lower rate than your personal income tax. Although we assist you with the incorporation of the corporation, we encourage you to consult with your accountant to determine the most tax-effective structure.
