Navigating The Benefits Of Professional Incorporation For Freelancers In BC
Are you a licensed professional offering freelance services? If so, you can form a separate corporate entity with other professionals like you. Forming such a body is called professional incorporation.
The benefits of incorporation are not limited to conventional businesses. Licensed professionals can also incorporate their associations and enjoy various benefits like limited liabilities, tax benefits, and more. If you live in British Columbia, you can seek the help of an experienced professional incorporation lawyer in BC to navigate the entire process.
Such incorporation applies to specific licensed professionals, such as lawyers, doctors, architects, accountants, engineers, etc. Instead of practising independently, being a part of an established structure helps them financially and professionally.
Here are a few major benefits of professional incorporation for freelancers in BC:
Limited Liability
Professional incorporation limits your liability in terms of organizational debts. While freelancers are always at risk of losing their wealth while settling their debts, professionals associated with a structured organization are relatively safer.
However, remember that professional incorporation will limit your liability only in terms of financial debts and contracts. You will still be held completely liable if you are guilty of any malpractice while working.
Tax Benefits
The corporate tax in British Columbia is lower for professional corporations than conventional businesses. These rates are also lower than personal tax rates freelancers would otherwise need to pay.
You can also receive tax deferral benefits through professional incorporation. Many professionals avoid withdrawing their income and keep it within the organization to save taxes.
Retirement Planning
Joining a professional corporation helps you plan for your retirement in the best way possible. Here, you can set up your corporate investment portfolio and retain your earnings to receive benefits in the future.
Many professional corporations in British Columbia also allow their stakeholders to create their individual pension plans to secure their future. This is a more organized and secure way to plan your retirement instead of saving money as a freelancer.
High Credibility
Professionals associated with corporations enjoy greater credibility than most independent freelancers. This is because every professional corporation follows the regulations of the licensing board of the concerned domain. So, if you offer your services from such a corporation, you can easily gain your clients’ trust.
Perpetual Existence
Just like a business organization, a professional corporation enjoys a perpetual existence. It is not affected by the demise of one or more of its stakeholders. This assures professionals of being a part of an organization that won’t end anytime soon.
Dividend Payment
You can be entitled to dividends from the profits your professional corporation makes. Such incentives keep the corporation’s members active and dedicated. In certain cases, the family members of professionals can also receive regular dividends.
Securing Finances
The reputation of individual professionals and the corporation is often high as the organization follows the rules of domain-specific licensing bodies. This makes securing funds from suitable investors easier. An individual freelancer often struggles to secure investment to enhance their services. A professional corporation can use these funds to help its members and expand its operations.
Important Considerations Regarding Professional Incorporation In BC
While the benefits of professional incorporation in British Columbia are many, this arrangement also has certain limitations. Here are some of the most important considerations regarding setting up or joining a professional corporation in the province:
Not For All Professionals
The professionals who can form such corporations are specific and depend on domain-specific regulatory bodies. Not every working professional is eligible for professional incorporation in BC. Check whether you can form such an organization before taking any major step.
Dealing With Complexities
Forming and managing a professional incorporation is more complex than working as an individual freelancer. You will be managing a team of similar professionals while following the rules laid down by the licensing bodies. Consult an experienced professional incorporation lawyer in BC before forming such a corporate structure.
Additional Expenses
Professional incorporation comes with various additional expenses along with initial incorporation costs. You will need to pay fees to report your finances, file your corporate taxes, hire legal professionals, and more. Check your financial health before forming such a corporation in BC.
No Professional Liability Protection
The liability in professional incorporation is limited to the organization’s assets. A professional receives no protection for professional liability. If they are accused of malpractices, they will be held solely responsible for the same. If you feel you have been framed unjustly, you can seek your lawyer’s help in navigating the issue.
Strict Regulations
All professional corporations are subject to the regulations set by professional licensing bodies. You will be required to comply with all these rules and pay penalties for disobeying them. Professionals working in these associations need to be extra careful as their actions represent their organizations’ reputation.
Receive Comprehensive Legal Help With Professional Incorporation With Cube Law
If you are a licensed professional willing to form a separate legal entity with other freelancers, Cube Law will help you with professional incorporation in British Columbia. Our lawyers are well-versed in BC law and the regulations of licensing bodies across the board. They will help you draft agreements, review them, and go through the legalities of bringing your professional corporation to life.