Incorporation is the process of creating a distinct legal entity, called a corporation, to become the owner of your medical practice. You are then paid out by this entity, either as an employee or a shareholder, in the form of a salary, dividends, or bonuses. Under the Canadian Income Tax Act, a corporation is a separate taxpayer, and has the same rights and obligations as a natural person. It can enter into contracts, acquire assets, and go into debt, but while you, the physician, continue to control the corporation, it’s debt and liabilities remain separate from its shareholders- shielding you from bearing responsibility. Its separate legal status, property rights and liabilities will continue to exist until the corporation is dissolved.

About the Author: Alex Powell

CPA CA, Director

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