Medical Corporations - British Columbia

[McMasterHopeful]

For those in private practice in BC it is my understanding that all physicians must do business under a specific entity - a "medical corporation"

 

I am interested in knowing more about the tax implications and differences, if any, between the med corp and a standard business corp (which I am quite familiar with). Obviously a thorough conversation with a tax accountant is in order, but if anyone can make some general comments that would be nice.

 

For instance, under the medical corporation are you more limited with the nature of expenses you can write off?

 

Under a typical business corp I could write off vehicles, gifts, entertainment - dinners, business travel. In short, maximizing the amount of money you keep. Legally of course.

 

Do you know if a corporation can wholly own a medical corporation? Or does a licensed physician have to own all of the shares of a medical corporation?

 

Feel free to comment on anything you feel might be relevant.....

 

Thanks

[cheech10]

I can't speak to BC, but it's probably similar to Ontario, where I practice.

 

You probably don't need to incorporate and can run a practice as a sole proprietor instead. Benefits of incorporating include tax deferral on profits retained in the corporation, and greater opportunities for income splitting via dividends. Drawbacks include greater record keeping and reporting responsibilities, so higher legal and accounting costs.

 

Otherwise, it pretty much runs the same a sole proprietorship, same business deductions, etc.

 

Specific differences for medical corporations include: limits on who can be shareholders (spouse, children, parents, but not in-laws, for example), voting shares and officers of the corporation can only be held by or filled by physicians, and unlike a regular corporation, there is no limited liability (ie your personal assets can be lost in case of bankruptcy or court award against your medical corporation). Other than these, there is no real difference, at least in Ontario.