Whether to incorporate your professional practice
Ontario now allows professional to incorporate their practice. Professional incorporation can confer many of the same tax and non-tax advantages enjoyed by other incorporated self-employed individuals.
Watch out your professional liability
Professional liability will not be limited through incorporation and shareholders of professional corporations are restricted to members of the same profession.
One important benefit of incorporation is the fact that corporations enjoy a considerably lower tax rate. However, this benefit is only maximized if the income is not withdrawn from the incorporated practice. Therefore, you may not want to consider incorporating unless you are able to retain some of the income within the corporation. Your access to the qualified small business corporation capital gain exemption may also a factor you need to consider when you sell your incorporate practice in the future.
If you wish to incorporate your practice you should consult your governing body for conditions of incorporation specific to your profession. Your tax adviser can assist you in determining whether or not incorporation would be beneficial.
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