Medical professionals in Ontario can benefit from incorporating a Medicine Professional Corporation (MPC). Physicians require a Certificate of Authorization from the College of Physicians and Surgeons of Ontario (CPSO) to operate a Medicine Professional Corporation. This certificate is necessary for the professional corporation to legally practice medicine in Ontario. This article provides an overview of the legal framework that governs the incorporation and operation of MPCs in Ontario. A Medicine Professional Corporation is subject to the Ontario Business Corporations Act and CPSO regulations.
One of the main differences between professional and non-professional corporations is their liability protection level. For example, if a physician operates through a Medicine Professional Corporation, they will not be able to shield themselves from personal liability in relation to their professional obligations. In the event of a claim against the physician for professional misconduct, the physician and the Medicine Professional Corporation will be jointly and severally liable to satisfy all professional liability claims. In such cases, both parties will rely on their professional liability insurance to settle such claims.
The process of incorporating an MPC in Ontario involves several steps:
- Jurisdiction: Physicians licensed in Ontario cannot use a federal corporation for their professional corporation. They must use an Ontario corporation.
- Name Selection and Reservation: The proposed name of the MPC must comply with CPSO guidelines and be approved by the Ministry of Government Services. A medicine professional corporation’s name must follow a strict format and should not include additional words or characters. The name must include the physician’s surname as it appears on the CPSO’s register, and may also include their given names or initials. If there are multiple physician members, the name only needs to contain one member’s name. Additionally, the name must include the words “Medicine Professional Corporation” or the French equivalent, “Medecine Societe Professionnelle.”
- Articles of Incorporation: The incorporation process begins with submitting Articles of Incorporation to the Companies Branch of the Ministry of Government Services. The Articles must specify the nature of the business to be undertaken by the MPC and include a clause restricting the business activities to the practice of medicine.
- CPSO Certificate of Authorization: Following incorporation, the corporation must apply for a Certificate of Authorization from the CPSO. The non-refundable application fee is $400 as of March 3, 2024 and is payable online during the application process in the CPSO Member Portal.
Advantages of Incorporating a Medical Professional Corporation
- Tax Benefits: Physicians in Canada can benefit from creating a Medicine Professional Corporation. This allows them to take advantage of the small-business deduction available on active business income for Canadian Controlled Private Corporations. By forming a medical professional corporation, physicians can leave a portion of their business income in the corporation. This defers the payment of personal taxes on this income until they decide to pay themselves.
- Limited Liability: Incorporation is a popular way of safeguarding individual owners and operators from personal liability. This is because a corporation becomes a separate legal entity that can be held responsible for its debts. However, there are certain restrictions on protecting personal liability in professional corporations due to the standards of professional liability associated with various professions. For instance, doctors in a professional corporation cannot avoid medical malpractice claims. A professional corporation offers some protection from creditors in case you borrow money. For example, borrow a loan to finance a new office or buy some equipment. The professional corporation may protect you from personal liability if you cannot repay those loans.
- Planning for the Future: As growing a business often requires a significant investment of capital, having the MPC pay for those expenses may lead to substantial tax savings. Moreover, retaining passive income within the corporation enables income smoothing over time to account for life changes, such as parental leave and retirement planning.
Summary
Incorporating a Medicine Professional Corporation in Ontario is a critical decision that necessitates careful consideration of the legal and regulatory obligations. Medical professionals can successfully navigate the incorporation process by complying with the requirements specified in the OBCA and CPSO guidelines. It is recommended that individuals seeking incorporation should seek guidance from legal and accounting professionals to ensure that their corporation is structured and operated in compliance with the applicable laws and regulations.
If you are in search of guidance from a Toronto Incorporation Lawyer, contact us and see how our firm can help you.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
