So you are a dentist, and you want to have a professional corporation for tax purposes. Here’s the general process:
- Under the Regulated Health Professions Act, 1991, no corporation shall hold itself out as a health profession corporation unless it holds a valid certificate of authorization: s. 34.1(1).
- Schedule 2 of that Act discusses Health Profession Corporations (ss. 85.8 through to 85.14).
- Subject to the regulations made the Act and the by-laws, one or more members of the same health profession may establish a health profession corporation for the purposes of practising their health profession: s. 85.8(1).
- The Certificates of Authorization (Ontario Regulation 39/02) are made under the Act.
- You will need to have a corporation BEFORE you can have a health profession corporation. In other words, a health profession corporation is simply a corporation holding a certificate of authorization. So the corporation will need to be registered with the Ontario Business Corporations Act. To register a corporation, you should have a lawyer prepare the articles of incorporation, the by-laws, director and shareholder resolution and meeting minutes, director and shareholder registry, etc. A lawyer may also be needed to create a special class of shares for certain family members (for income-splitting purposes).
- If you would like a lawyer to fill out the Certificate of Authorization, lawyers would charge extra for their time and it would also cost $750 in fees to the Royal College of Dental Surgeons of Ontario.
- Depending on the name you choose for your professional corporation, the normal time frame to incorporate is between 1-3 business days. If there are issues with the name you’ve selected, it could take longer.
FYI, you might want to consider getting a memo from a lawyer on the tax advantages/potential traps of having a dental professional corporation. There are many things that you should be aware of (e.g. income splitting, loans, attribution rules, etc.). The way I see it, if you’re going so far as to spend $2,500 to $3,000 incorporating (which includes getting a certificate of authorization), you should spend a bit extra to find out what you can legally do with a corporation with respect to taxes.