Dental operatory view for practice structure planning

    Dental Practice Business Structure

    Choose the optimal structure for your practice

    Business Structure Comparison

    FactorCorporation ⭐Sole ProprietorshipPartnership
    Tax Rate11-12.5% (CRA SBD)43-53%43-53%
    Liability ProtectionYes (Limited)NoneNone (shared)
    Setup Cost$2K-$4K$200-$500$1K-$3K
    Annual Costs$3K-$6K
    (accounting, filing)
    $500-$1K$2K-$4K
    Income SplittingYes (spouse, family)NoLimited
    Capital Gains Exemption$1.25M lifetimeNoAvailable
    Investment Income Tax50-55% (corporate rate)43-53%43-53%
    Recommended ForIncome over $150KVery low income onlyMultiple owners (rare)
    Tax Savings (on $350K income)~$100K-$150K/yearBaseline (no savings)Baseline (no savings)

    Corporation (Best)

    Tax rate: 11-12.5% on first $500K. Liability protection, income splitting, capital gains exemption on sale. Setup: $2K-$4K, annual: $3K-$6K.

    For income $150K+

    Sole Proprietorship

    Tax rate: 43-53% on all income. No liability protection, limited tax planning. Setup: $200-$500, minimal ongoing costs.

    Very low income only

    Partnership

    Similar to sole proprietorship but shared. Requires partnership agreement. Each partner personally liable. Consider professional corporation partnership instead.

    Rare in modern practices

    When to Incorporate

    Incorporate when earning $150K+ and retaining $30K+ after expenses. Below this threshold, incorporation costs exceed benefits.

    Most practice owners incorporate immediately upon purchase given typical income levels of $250K-$350K+. Proper tax planning ensures you maximize the benefits.

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    Choose Your Optimal Structure

    The right business structure provides tax efficiency, liability protection, and operational flexibility. We'll analyze your situation and recommend the best approach.

    Let's determine whether incorporation makes sense for your practice.

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