Incorporating as a Veterinarian
A LEGAL BUSINESS IS A HEALTHY BUSINESS
As a Veterinarian, it’s important to give your business professional credibility while ensuring it stays healthy and profitable. When it’s time to take your career to the next level, incorporating will help create a secure, sustainable, and professional business that’s both protected from liability and properly equipped for future growth.
The Benefits of Incorporation for Veterinarians
Because veterinarians operating as an employee or a sole proprietorship are taxed at their personal tax rate, many veterinarians will be paying well over 30% of their annual salary in taxes, with limited opportunity for tax deferral and savings. However, not only is there tax deferral and savings strategies available to corporations, there is also a lower corporate tax rate.
The top marginal tax bracket for individuals is 33% (federal) and 20.5% (BC), so high earning veterinarians will eventually be paying more than 50% in taxes. The top marginal tax liability for corporations is 15% (federal) and 12% (BC), totalling 27%. However, on qualifying corporate income under $500,000, the tax rate is a combined 11%.
A veterinarian operating as a sole proprietorship who makes $500,000/year can expect to pay $229,012 in tax. The same veterinarian who has incorporated and qualifies for the small business deduction can expect to pay $55,000 in tax.
Along with the lower tax rate, there are also tax strategies veterinarians can take advantage of once they incorporate. The Lifetime Capital Gains Exemption allows business owners to save hundreds of thousands of dollars upon the sale of their business. For information on the LCGE, check out this article. There are more strategies available such as use of trusts, estate freezes, and holding companies.
Further benefits to incorporating include limited liability and professional credibility. Incorporation can protect personal assets by limiting certain liabilities to the corporation. An incorporated practice may add a feeling of confidence and credibility to clients and other professionals.
What Does The Incorporation Process Look Like For a Veterinarian?
Veterinarians first must be granted Private Practice registration by the College of Veterinarians of British Columbia (CVBC). An application for registration needs to have all of the following:
The application form, completed and signed by the registrant and witnessed by a notary public or commissioner of oaths.
Application for Registration fee and the Bylaw Exam and Seminar Fee. The total cost including GST is $892.50
A passport style photo taken within the last 3 months
Proof of legal status allowing you to perform veterinarian work in Canada
Two pieces of government issued ID, including one with a photo
Proof of Veterinary Degree
If you are an ABVS or EBVS Board-Certified Specialist, you will need to provide Proof of Certification and Proof of Current Good Standing
Assessment of English Language Proficiency
Current letters of standing or licensure verification from all jurisdictions where you have practiced veterinary medicine or been registered
If you have practiced veterinary medicine under a different name than your current one, you must provide legal proof of the name change
Certificate of Qualification from the National Examining Board
Successful completion of the CVBC’s Bylaw & Ethics Exam
Payment of the Annual Registration Fee ($1464.75). This is prorated, on a quarterly basis.
The CVBC’s Contact & Practice Information form
Once registered with the CVBC, you’ll need to apply to incorporate with the BC Corporate Registry. A legal professional can assist you with this process.
FAQs
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Without incorporation, you will be subject to a higher tax liability and may have a difficult time securing financing for your Veterinarian business.
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With many benefits of incorporation, it’s important to understand that there will be an extra layer of complexity to running your business. You will have more administrative work to handle and will also need to to file an income tax return on top of your personal tax return. A trusted team of professionals including a lawyer and an accountant can help you manage these additional complexities so you don’t get overwhelmed with administrative paperwork and filings.
Ready to incorporate your Veterinarian Business?
When it’s time to incorporate your Veterinarian business, Parr Business Law can help you navigate the process with confidence and clarity. Our lawyers have the specialized knowledge to provide you with reliable and candid legal advice so you can hold onto more of your hard-earned profits and create the professional credibility your business needs. Schedule a consultation call with us today to get started.