For many physicians in Ontario, the decision to incorporate offers numerous advantages, ranging from potential tax benefits to liability protection. However, the process of incorporation for medical professionals carries specific requirements, most notably those set out by the College of Physicians and Surgeons of Ontario (CPSO).
Here’s a guide to help physicians understand the ins and outs of incorporation and business registration, keeping the College’s professional corporation rules in mind.
1. Professional Corporation versus General Corporation:
- While many businesses can operate under general corporations, physicians must establish a Professional Corporation (PC). This is subject to regulations imposed by both the Ontario Business Corporations Act (OBCA) and the CPSO.
2. Name Selection for the Professional Corporation:
- The CPSO mandates strict naming conventions. Typically, the name must include the physician’s full name, followed by “Professional Corporation” and an indication of the health services provided (e.g., “Dr. Jane Doe Medicine Professional Corporation”).
3. Certificate of Authorization:
- To operate a medical PC in Ontario, physicians must obtain a Certificate of Authorization from the CPSO. This certificate ensures the corporation practices medicine in compliance with the Regulated Health Professions Act.
4. Shareholders, Officers, and Directors:
- Only members of the CPSO can hold shares in a medical PC.
- All officers and directors of the corporation must also be shareholders.
5. Maintaining the Professional Corporation:
- Physicians are required to renew the Certificate of Authorization annually.
- Changes to the PC, such as its name or shareholders, must be reported to the CPSO promptly.
6. Limitations of a Professional Corporation:
- While a PC offers certain advantages, it’s essential to understand its limitations. Incorporation does not shield a physician from professional liability. It’s imperative to maintain separate professional liability insurance.
- The medical PC can only engage in the practice of medicine and related activities.
7. Tax Planning and Benefits:
- Incorporation may offer physicians potential tax benefits, such as lower corporate tax rates on retained earnings and income splitting opportunities. It’s recommended to consult with a tax professional to optimize these benefits.
Incorporation: A Decision Not to Be Taken Lightly
While incorporating a medical practice in Ontario can offer numerous benefits, it’s a decision that requires careful consideration and understanding of both legal and professional obligations. The rules and guidelines set by the CPSO are in place to uphold the standards of the medical profession and to protect the public.
For physicians contemplating incorporation or those seeking clarity on the intricate rules surrounding professional corporations, expert legal guidance is paramount.
Falcon Law PC has a deep understanding of the intricacies involved in establishing and maintaining medical professional corporations in Ontario. If you’re a physician seeking detailed guidance on incorporation and business registration, our team is here to assist. Contact us today at 1-877-892-7778 or via email at email@example.com.