Incorporate a professional corporation

Professional incorporation: how it works

A professional corporation is an ordinary business corporation with additional rules. It is created by filing articles with a corporate registry, like any corporation, but the profession's governing statute and its regulator (a college, law society, order or institute) add conditions: the corporation may only practise the profession and related activities, its voting shares are reserved to members of the profession, its name follows set wording, and it cannot start practising until the regulator has authorized it.

Incorporating changes how the practice is organized, not the professional's personal accountability. In general, a professional remains personally liable for their own professional negligence even when they practise through a corporation; the corporation can still separate business obligations such as a lease or a supplier contract. Many regulators also require the corporation to carry, or be covered by, liability insurance.

The reasons professionals look at incorporation vary: organizing a practice with several professionals, separating the practice's finances, or managing how income is earned over time. The tax effects depend on income, expenses, family situation and province, and they change with tax rules. An accountant who works with your profession can model them for your situation.

Which professions can incorporate

Professions are regulated by the provinces and territories, so the list of professions that may incorporate is set province by province, by statute and by each regulator's own rules. A professional corporation is therefore generally incorporated under the law of the province or territory where the profession is practised. The rules we have verified so far:

• Ontario: Professions allowed by their governing Act, regulated health professions, CPAs, lawyers (Law Society Act), social workers, veterinarianssource.
• Quebec: Possible for members of a professional order, in an organization of any legal form, subject to Chapter VI.3 and Office/order regulationssource.
• Alberta: CPAs, chiropractors, dentistry, law, medicine, optometrysource.
• New Brunswick: Only if expressly permitted by the Act governing the professionsource.
• Yukon: Required: registration, Yukon permit, yearly renewalsource.

The rules for British Columbia, Saskatchewan, Manitoba, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories and Nunavut are being verified and are not displayed here yet. Your regulator's website is the reference for your profession: even where the provincial statute allows a profession to incorporate, the regulator decides on the conditions and issues the authorization.

Quebec works differently from the other provinces. The Professional Code lets members of a professional order practise within a joint-stock company or a limited liability partnership, provided their order has adopted a regulation that allows it and sets the conditions. It is the order's regulation, not the corporate statute, that settles who may hold shares, who may sit on the board and which insurance is required.

Regulator approval and permit

Before a professional corporation can practise, its regulator must authorize it. The name of the document varies (certificate of authorization, permit, registration or declaration to the order), as does the timing: some regulators review the proposed name and articles before incorporation, others issue the authorization after the registry has created the corporation. In Quebec, a professional who practises within a company declares it to their order under the order's regulation.

1. 1Read your regulator's rulesFind the regulator's by-law or regulation on professional corporations and its application form. Note the required name wording, the permitted shareholders and any insurance requirement.
2. 2Name review, where requiredSome regulators approve the proposed name before the articles are filed. The registry's own name rules apply too.
3. 3Incorporation with the registryThe articles are filed with the restrictions the regulator requires on purpose, shares and transfers.
4. 4Application to the regulatorThe application usually includes the certificate of incorporation, the articles, the list of shareholders, directors and officers, and proof of insurance.
5. 5Authorization and renewalOnce authorized, the corporation can practise. Many regulators require an annual renewal and a notice of any change in shareholders or directors.

Ownership and name restrictions

These restrictions are what distinguish a professional corporation from an ordinary one, and they are written into the articles so that the registry and the regulator can check them.

• Voting shares: generally held only by members in good standing of the profession, and in some cases only by members of the same regulator.
• Non-voting shares: some regulators allow certain family members, or a trust for them, to hold non-voting shares; others do not. The rule is profession-specific.
• Directors and officers: often required to be members of the profession as well.
• Purpose: limited to practising the profession and activities related or incidental to it.
• Name: usually includes the professional's surname or the practice name and wording such as "Professional Corporation"; numbered names are often not accepted. In Ontario, the statute requires the name to include "Professional Corporation" or "société professionnelle".
• Losing eligibility: if a shareholder ceases to be a member of the profession, the regulator's rules usually set a deadline to transfer the shares.

Professional corporation or practising in your own name?

Most regulated professionals can also practise in their own name, as a sole proprietor, or with colleagues in a partnership. The comparison below sums up the general differences; the right choice depends on the practice and on advice from an accountant and a lawyer.

Government and regulator fees (sourced)

A professional corporation pays two kinds of fees: the registry's incorporation fee, which is the same as for any business corporation in that jurisdiction, and the regulator's fees for the authorization and its renewals.

Regulator fees are set by each college, law society, order or institute, and they change more often than registry fees. They are being verified and are not displayed here; your regulator's fee schedule is the reference. Professional liability insurance, where required, is a separate cost.

After incorporation: ongoing obligations

A professional corporation keeps the obligations of any corporation and adds the regulator's. The corporation files its annual returnannual returnMandatory yearly filing with the registry, separate from the tax return. Missing it can lead to dissolution.See definition → with the registry and a corporate tax return with the CRA, keeps its minute bookminute bookOfficial record holding a corporation’s articles, by-laws, resolutions and registers.See definition → and registers for payroll or sales taxes where they apply. On the regulator's side, it renews its authorization, keeps its insurance current and reports changes in shareholders, directors or name.

• Annual return in Ontario: $0source.
• Annual updating declaration in Quebec: $106 per year (filed on time)source.
• Annual return in Alberta: $53.05 government feesource.

How Incorpo handles your professional incorporation

1. 1Guided questionnaireYou tell us your profession, your province, the shareholders and directors, and the restrictions your regulator imposes on the name, purpose and shares.
2. 2Articles with the restrictionsWe prepare the articles with the purpose, share and transfer restrictions you identified. You review them, ideally with your regulator's checklist, before anything is filed.
3. 3Filing with the registryWe file with the provincial or territorial registry and pay the government fee for you, shown separately on your quote.
4. 4Documents for your regulatorYou receive the certificate, the articles and a digital minute book with the registers your regulator usually asks to see. The application to the regulator is made in your name, under its rules.