As a physician, you’re probably familiar with the option of incorporating your practice.
Incorporation is the process of creating a distinct legal entity to become the owner of your practice, separating the ownership from yourself. You are then paid out by this entity, either as an employee or a shareholder, in the form of a salary, dividends, or bonuses.
Incorporation depends on many personal factors and should be considered on a case-by-case basis. As a general rule of thumb, incorporation is favourable if the advantages are greater than costs associated with the incorporation process. The main reason why physicians choose to incorporate is to benefit from the tax advantages that a corporation is entitled to, under Canada’s Income Tax Act. In addition to lower tax rates, other tax advantages include tax deferrals, lifetime capital gains exemption, and income splitting opportunities.
There’s a lot to consider when deciding whether or not incorporating your practice is right for you. At MedTax, our financial experts work with you to carefully evaluate your specific situation, to determine and implement the best tax structure for your long-term goals. If incorporation is right for you, we’ll help guide you through the process, and have your corporation up and running in 21 days flat.