Incorporating Firm Can Bring Tax Relief

A professional corporation allows professionals — such as doctors, dentists, lawyers and accountants — to provide their services to clients through a corporate entity, rather than personally.  The corporate entity must be created under the auspices of provincial or territorial corporate statutes and comply with rules determined by provincial regulatory bodies. The rules typically control the structure and operation of such entities to ensure that they do not violate, or circumvent, professional codes of conduct and practice. For most professionals, the most compelling reason for incorporating is to benefit from corporate tax advantages. The principal advantage from a professional corporation is tax deferral. The difference between the tax payable by incorporated and unincorporated professional practices is significant. Individuals pay tax on their business income at progressive marginal tax rates.