In British Columbia, there are a number of different colleges and regulating bodies that govern specific professions operating within the province. Each of those institutions provides for their own set of requirements for registrants in a particular industry including, but not limited to, the following:
- Real Estate Council of British Columbia;
- Law Society of British Columbia;
- College of Physicians and Surgeons of British Columbia;
- College of Massage Therapists of British Columbia;
- College of Optometrists of British Columbia;
- Chartered Professional Accountants of British Columbia;
- Association of Professional Engineers and Geoscientists of BC; and
- College of Veterinarians of British Columbia.
For many professionals, operating through a professional corporation can be advantageous from a tax planning perspective. In some cases, it will provide the opportunity to split income with a spouse as well as the ability to defer personal income to a future year if not all income is required in a particular year. The decision whether to proceed with a professional corporation, in most cases, is primarily based upon tax and accounting benefits. In most professions, whether you practice through a professional corporation or personally, you do not protect yourself from liability arising in the performance of your profession. In some cases, you may be required to pay dual permitting fees and insurance fees imposed by the applicable regulating body, yet in others, there is a combined permit fee and insurance premium provided for both the professional corporation and the individual. It is important that the additional cost of dual fees is considered in determining whether a professional corporation makes sense for a specific professional.
As each type of professional generally has a specific set of rules and regulations applicable to the incorporation and maintenance of a professional corporation, the specific requirements must be reviewed in each case to ensure compliance. A very common requirement is a restriction on the shareholders and directors of the professional corporation such that only immediate family members can hold shares (which usually must be a specific kind – i.e. non-voting).
Once a decision has been made to incorporate a professional corporation, there are a number of steps that are often required by each regulating body (although not always in the order below) including, but not limited to, the following:
- Compliance with naming requirements with respect to the professional corporation (some regulating bodies require names to be submitted in advance for approval while others set out very specific requirements so that approval in advance is not a requirement). Please note that any such requirement is in addition to the name reservation requirement under the Business Corporations Act of British Columbia;
- An application to the regulating body for a permit for the new professional corporation;
- Incorporation of the new professional corporation ensuring compliance with all restrictions on shareholdings, directorships, and applicable bylaws and statutory requirements;
- Submission of the incorporation documents to the regulating body for review and approval;
- Payment of any required fees; and
- Issuance of a permit. Please note that the professional corporation cannot provide services until such time as the permit has been issued.
In many cases, there are annual reporting requirements as well and can also be annual payment requirements for fees and insurance (sometimes one set and sometimes two). It is very important that all initial and ongoing requirements are complied with to ensure the professional corporation remains in good standing with the applicable regulating body.
While there can be significant benefits to a professional corporation, the process can be fairly lengthy and quite specific. Accordingly, we recommend that you retain a lawyer to assist you with the process and ensure your new professional corporation is set up in compliance with all requirements. Please do not hesitate to contact us if you would like to learn more about professional corporations or to discuss whether professional incorporation is right for you.
Author: Una Gabie
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of business law at the following:Jennette Vopicka: email@example.com Danielle (Dani) Brito: firstname.lastname@example.org Jaime M. Boyle: email@example.com