Incorporating a Dental Practice | Getting a Dentistry Professional Corporation

Incorporating a Dental Practice | Getting a Dentistry Professional Corporation

Registering a Dentistry Professional Corporation Nuances

Please, remember that the information below is for educational aims only and not to be taken as legal advice. If you need legal advice with respect to setting up a dental, health, or legal professional corporation, you should seek professional assistance (e.g. make a post on Dynamic Lawyers).

Share Structure

Lawyers normally work with your accountant toconfiguret the best share structure. Reminder for everyone: whoever owns the shares controls the corporation. But shareholders can also own non-voting shares, which suggests that they have no right to elect the board of directors. In classic share structure for a dentistry professional corporation, you'll have the dentists owning the voting shares (also called common shares) and then you'll have the dentists' family members owning non-voting shares. There is generally special shares for dividend sprinkling. The aim here is that the corporation can, if it has held earnings in the year (i.e. earnings after taxes, interest, amortization, etc.), then the board of directors can declare and issue dividends to certain types of shareholders. Beyond any doubt, you can put redemption provisions into certain shares so that the board of directors or the shareholders themselves can redeem shares for a set amount of money (e.g. $1). This is an excellent way to practice if the corporation is ever going to get sold and you need to buy back all of those outstanding shares.

Certificate of Authorization

In order to practice dentistry, acorporation needs a Certificate of Authorization from the Royal College of Dental Surgeons of Ontario. In fact,the document you file with the government in order to create the corporation needs to restrict the corporation's business to only practicing dentistry and things related to that.

Now, in order to get a hold of your certificate of authorization, you'll need a lawyer, to also double check that every single requirement is met..There are statutory declarations that insists that you swear that certain things are true before a commissioner of taking oaths (e.g. a lawyer). You'll also need to have notarized (i.e. true copies) copies of things like your articles of incorporation and Status Certificate. It usually takes 5-10 business days for the College to process your paperwork and issue the corporation a Certificate of Authorization.

Employment Agreement

Now, the corporation is a separate legal entity. That means that it's separate from its owners (shareholders) and managers (i.e. directors, officers, and employees). So, dentists,hygienists and receptionists are generally employees of the corporation. They receive employment income and get taxed on it. There may be different relationships too. For example, a dentist may show up every now and then, have their own clients, use their own tools, and be considered an independent contractor of the professional corporation.

The relationship matters for tax purposes (e.g. independent contractors can write off their reasonable business expenses), as well as for minimal employment standards (e.g. minimum pay, maximum hours, etc.). So dentists should consider what their relationship is going to be and whether an employment agreement is necessary. Note that forms are sold at dynamiclawyers: employment agreements for Ontario for only $47 plus tax.

Take note: a dentistry professional corporation is still a corporation (just like a limited partnership is still a partnership). This signifies that it will have a basic corporate structure comprised of shareholders who elect directors and directors who assign officers and officers who hire employees.

Trade Name

Another valuable thing to keep in mind is that, when it comes to advertising your dentistry professional corporation, or simply putting its name on an invoice to clients, you need to tell them that the business is being carried on by a dentistry professional corporation. Example: If a corporation is called Carabash Dentistry Professional Corporation, and you want to advertise it as "Leslie Street Dental Clinic" because it happens to be on Leslie Street. Normally, you would register that name as a tradename under the Business Names Act. Why? Well, because a corporation cannot carry on business under any name (other than its own name) unless that name has been registered. Then, when it comes to invoices, contracts, etc. you'll have to state somewhere that Carabash Dentistry Professional Corporation carries on business as "Leslie Street Dental".

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