Selecting an appropriate corporate structure is an important part of strategic and business planning for any medical clinic. This section highlights important elements related to registration requirements and corporate structure.
The information shared in this section are meant to highlight important element and do not represent legal advice. It is essential for aspiring clinic owners to consult with a business lawyer, accountant, and/or financial advisor to review their options prior to establishing their corporate structure. These professionals can help clarify tax and legal implications and any business regulations or bylaws, such as business license requirements.
Corporate Structure
A business’s legal form, or corporate structure, indicates whether it is a separate entity from its owners. The legal form, therefore, influences the business’s legal status, tax obligations and responsibilities.
In Canada, most businesses operate under one of the following three legal forms:
- Sole proprietorship
- General partnership
- Corporation
Choosing the legal structure that best fits your business is not always easy. It is important for entrepreneurs to carefully weigh the potential benefits and drawbacks of each legal form to identify the option(s) that best aligns with your goals. The following table breaks down the pros and cons of each business structure.
| Sole proprietorship | General Partnership | Corporation |
Definition | An informal and easily created legal form where the business and the person running it are the same in the eyes of legal and tax authorities. Risks extend to owners’ personal assets as there is not a separate legal entity. | A general partnership is like a sole proprietorship but with two or more owners. Likewise, the business and the individuals running it are the same in the eyes of legal and tax authorities. The partners usually have some type of contractual agreement that governs how income, expenses and tasks are shared. | A legal entity, also known as a company. A corporation is a more complicated legal structure than a sole proprietorship or a general partnership. It is a separate legal entity from its owners. A corporation provides a certain level of protection regarding liability for the business’s debts. |
Legal status | Does not exist as a separate legal entity Ownership = Owner | Does not exist as a separate legal entity Ownership = Owner | Treated as a separate legal entity from its owners Ownership = Shareholders |
Control | Owner has total control | Partnership agreement determines control among partners | Directors and shareholders |
Profits | Paid to the owner | Paid to partners according to a partnership agreement | Earned by the corporation, which may pay dividends to shareholders and/or retain them in the corporation |
Debts | Owner is responsible (unlimited liability) | Partners are individually and collectively responsible | Paid by the corporation |
Taxation | Owner pays taxes on the business’s income as an individual, as if they are an employee of the business | Partners pay taxes individually according to their share of the income | The corporation pays corporate taxes separately from taxes paid by directors and shareholders |
Assets | Business assets fully belong to the owner | Business assets are jointly owned by the partners, or ownership is governed by a partnership agreement | Business assets are owned by the corporation, and shareholders have no specific rights to them |
Liability | The owner assumes all the risks of the business. | The owners assume all the risks of the business. | There is limited liability to the corporation’s shareholder(s). However, Under the Health Professions Act, the liability of a Nurse Practitioner for professional negligence is not affected by the fact that the Nurse Practitioner practices as an employee of a corporation. Speak to a lawyer for further information. |
Costs | No application required. Annual fees apply if you use an accountant to file taxes. | No application required. Annual fees apply if you use an accountant to file taxes. | Online applications cost approximately $200. If you choose to have a lawyer complete your application, prices may reach > $1,000. There are also ongoing annual legal and accounting costs. |
For More Information | Visit Government of Canada’s website for information on Sole Proprietorship | Visit Government of Canada’s website for information on Partnerships | For information on whether Incorporation is right for you please review the following information at Government of Canada’s website . |
The Business Development Bank of Canada (BDC) is a Crown corporation with a mandate to support Canadian entrepreneurs in small and medium sized businesses. You can learn more about each legal form and how to register for one on the BDC’s How to choose the right legal form for your business.
Business Registration and Licensing
Once the decisions about the type of Legal form or business structure have been made, The NP (or group of providers) will need to apply for a business name, register with BC Registries and Online Services, WorkSafeBC, the Ministry of Finance and Canada Revenue Agency.
Registering a Business
An important initial step for any medical facility owner is to register the business. BC Government’s Register Your Business page is helpful in getting you started. On the page, you will learn about how to:
- Review existing trademarks: this is to avoid choosing a name that infringes intellectual property of another business which could result in legal action. Further guidance on naming of facilities may be provided through regulatory bodies.
- Apply for a business name: this is completed through the BC Registries and Online Services where they will check the availability of the business name and determine whether it is valid for registration. Once it is processed, a Name Request Number will be issued.
- Register your business: Within 56 days of receiving a Name Request number for a business name, you will have to register the business with several government agencies. This includes:
- BC Registries and Online Services: this is where you register the business as either a sole proprietorship/partnership or incorporation. A business number will be issue. This is used as an identifier for remitting taxes to the government, Canada pension premiums, EI premiums and making WorkSafeBC payments
- WorkSafeBC: if you plan to hire workers (full-time, part-time, casual or contract) you are required by law to register with WorkSafeBC
- Ministry of Finance: this includes registering your business to collect Provincial Sales Tax and Employer Health Tax
- Canada Revenue Services: this is to register your business for GST/HST remittance and payroll deductions
If you have questions on choosing a business type, naming your business, and registering your business, reach out to the BC Registries and Online Services. You can:
- Call: 1-877-370-1033
- Email: BCRegistries@gov.ca
Obtaining a Business License
You must get the appropriate permits and licences to operate the medical practice. business. The application process is different for different municipalities and may require different prerequisites. The government’s BizPal tool helps outline the federal and provincial requirements for the municipality in which the clinic will operate.
In BC, the Part 4 of Health Profession Act (also known as Health Professions Corporation) provides important definitions, regulations related to naming and permits of medical incorporations in BC; further guidance on naming of facilities may be provided through regulatory bodies. For example, if an NP were to partner with a physician to start a clinic, the CPSBC’s steps for acquiring permits for new medical corporation would need to be followed; these include naming requirements.
WorkSafeBC Registration
Anyone who hires workers in B.C. is required to register for WorkSafeBC insurance coverage. Self-employed proprietor or partners may also be eligible to purchase optional insurance coverage. WorkSafeBC website contains information on who needs coverage as well as further details about the application process for coverage. Review the NNPBC Page related to WorkSafeBC to learn about the NP classification category to ensure you premiums are calculated correctly.
Applying for MSP Facility Number
Depending on the services offered and the types of providers in the clinic, it may be necessary to obtain an MSP facility number. Through this process, the clinic or facility registers with MSP to receive payments for medically necessary services performed by eligible practitioners (such as physicians who may have been recruited to join the clinic), the clinic will then deduct overhead and provide payments to those practitioners. NPs may also need to apply for a facility number for Provincial Attachment System (PAS). This registration allows MSP to identify and verify the facility for purposes of encounter coding, billing, and payment for services provided to eligible B.C residents. The government of BC website hosts the MSP related forms including the application for MSP Facility Number.
Business Insurance
When Considering Business insurance, it is important to distinguish between an NP’s professional liability insurance and the business (or corporation) liability insurance.
Professional Liability Insurance
In BC, NNPBC serves as the representative for professional liability protection for NPs and other nurses. NPs, RPNs, RNs, and ESNs are eligible beneficiaries of the Canadian Nurses Protective Society’s (CNPS) professional liability protection and core services. As part of this protection:
- NPs are eligible for CNPS professional liability protection in an amount up to $10 million per claim for professional negligence relating to nursing care provided in Canada
- CNPS professional liability protection applies only to the individual nurse providing professional nursing services. It does not extend to an association, partnership, incorporated company, corporate directors, shareholders, or employees of the business
- In the case where an independent nurse is also working as an employee within another organization, the employer’s insurance will only cover lawsuits that arise out of the employment, not those arising from the independent practice
- Additionally, CNPS professional liability protection (core services) does not include assistance with complaints to the nursing regulatory body. A nurse working in independent practice may therefore wish to consider additional protection for regulatory complaints
Through NNPBC, all NPs (as well as all RNs, LPNs, RPNs) also have Commercial General Liability insurance coverage provided by Encon Group Inc. There is an aggregate limit of $5,000,000 for all participants. The Commercial General Liability insurance applies if the NP is named as a defendant in a claim alleging injury or property damage to a third party because of the commercial operation of the business or the premises. For instance, third party claims arising from a slip-and-fall, property damage caused by an employee while providing services. (contact info@nnpbc.com for more info)
Business and Commercial Liability Insurance
In addition to any professional liability protection that may be required as an individual NP, should a NP decide to hire employees or structure their business as a separate legal entity, another source of professional liability protection will be required to respond to potential lawsuits commenced against the business or resulting from the activities of employees, for several reasons:
When services are provided through a business entity, a plaintiff alleging harm caused by the care or services provided may start legal proceedings against a NP who provided the care, against the business entity, or both. CNPS protection does not extend to a business entity
- If there are employees, it will be important to keep in mind that as the employer, the independent practitioner or their business can also be held liable for any act of negligence committed by employees
- Businesses may also face legal issues, unrelated to their practice, such as employment disputes, contractual disputes, equipment failure, property damage, etc.
- If electronic health information is managed by the business, that information may be intercepted, lost, or stolen
- If the business entity leases or sublets the clinic space, there may be additional legal responsibilities as a tenant or landlord
Consequently, it is important for the business to be adequately insured for potential issues arising from the provision of nursing services and operating a business. What is adequate will vary according to the circumstances, which may change over time. A business, financial or legal advisor may assist in determining the type and extent of protection or coverage that would be appropriate for the business.
Business liability insurance can be purchased through a commercial insurance broker. NPs, also have the option of purchasing business liability insurance through the Nursing Business Solutions (NBS) program (formerly known as CNPS Business Plus). The NBS program includes different insurance products made available by reputable commercial insurers and brokered by BMS, and exclusively available to CNPS beneficiaries. As such, this program is designed to offer business insurance coverage as a complement to the individual professional liability protection services offered by the CNPS. You can learn more about the NBS here.
Useful resources
More information related to professional and business liability insurance can be found on the following CNPS webpages:
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