Can I incorporate my professional practice in Ontario?

Many professionals in Ontario can incorporate, but under specific rules set by their governing bodies rather than the general Business Corporations Act. Professional corporations are a special category.

For example, lawyers can incorporate under the Law Society Act through a Law Corporation; accountants can form professional corporations under the CPA Ontario rules; physicians and other regulated health professionals have their own incorporating provisions. Each governing body sets restrictions on who can own shares (often limited to members of the profession or their spouses and family members under defined circumstances), what the shares can be, and what activities the corporation can carry on.

The tax benefits of incorporating — particularly the small business deduction and tax deferral — are available to most professional corporations on their active professional income, which is why many established professionals do incorporate. However, the liability protection is more limited for professionals. A professional corporation does not protect a professional from personal liability for their own professional negligence — that remains personal. What the corporation may protect is exposure to certain business debts and obligations that are not professional services liabilities.

Before incorporating your practice, verify the specific rules with your governing body and consult a lawyer familiar with professional corporations in your field.