- A standard corporation is incorporated under the OBCA (or federally under the CBCA), can generally carry on any lawful business its shareholders choose, and has no regulator beyond the…
- A professional corporation is still incorporated under the OBCA — it's a category of OBCA corporation, not a separate statute — but it operates under extra restrictions layered on by the…
Lawyers, doctors, dentists, accountants, and other regulated professionals in Ontario can incorporate their practices — but a professional corporation vs. regular corporation comparison isn't a debate about two flavours of the same thing. A professional corporation is still incorporated under the same underlying statute as an ordinary business, with an extra layer of rules from the professional's own regulator sitting on top.
Understanding what that extra layer actually changes — and what it doesn't — matters before you decide how to structure your practice.
What a Regular Ontario Business Corporation Looks Like
A standard corporation is incorporated under the OBCA (or federally under the CBCA), can generally carry on any lawful business its shareholders choose, and has no regulator beyond the corporate statute itself. Shares can generally be owned by virtually anyone the corporation's own rules allow. Its liability shield covers the corporation's ordinary business debts and obligations, keeping them separate from shareholders' personal assets in most circumstances.
What Makes a Professional Corporation Different
A professional corporation is still incorporated under the OBCA — it's a category of OBCA corporation, not a separate statute — but it operates under extra restrictions layered on by the professional's own governing body:
- Extra authorization is needed. A professional generally needs permission or authorization from their regulator before incorporating, and typically has to keep that authorization current for as long as the corporation operates.
- Share ownership is restricted. Shares are generally limited to licensed members of the profession (and, depending on the specific governing body's rules, sometimes certain family members) — you generally can't sell shares in a professional corporation to someone outside the profession.
- Naming rules are stricter. The corporate name usually has to reflect the professional's own name and identify it as a professional corporation, rather than allowing the fully flexible branding a regular business enjoys.
Comparison at a Glance
| Factor | Regular Business Corporation | Professional Corporation |
|---|---|---|
| Governing framework | OBCA / CBCA | OBCA, plus the profession's regulatory rules |
| Who can own shares | Generally open | Generally restricted to licensed members |
| Naming | Flexible branding allowed | Must generally reflect the professional's name and PC status |
| Extra approval needed to incorporate | No | Yes — authorization from the governing body |
| Shields ordinary business liability | Yes | Yes |
| Shields professional negligence liability | Not applicable | No |
What a Professional Corporation Does Not Protect Against
Neither a regular corporation nor a professional corporation shields someone from liability for their own negligence in providing a professional service. Incorporation — of any kind — is not a personal-liability force field. What it can do is separate the corporation's ordinary commercial liabilities (a lease, a supplier debt, an equipment loan) from the professional's personal assets. It does not change the standard of care a professional owes their clients or patients, and it does not shield them personally from a malpractice claim arising out of their own conduct.
Why Professionals Incorporate Anyway
Despite the extra layer of rules, many eligible professionals still choose to incorporate — often for potential tax planning advantages tied to how income is retained or paid out of the corporation. The specifics depend on current tax rules, your income level, and your personal financial picture, so this really is a conversation for your accountant rather than a general rule of thumb. If the tax side of the decision is what's driving your interest, it's worth a dedicated conversation — our Tax team and your accountant should be looking at that together with your corporate lawyer.
Frequently asked questions
Can any professional incorporate in Ontario?
Only professions whose governing body permits it and has rules in place for professional corporations — not every regulated occupation has this option, so check with your specific college or regulator before assuming you can incorporate.
Does incorporating protect me from a malpractice claim?
No. A professional corporation doesn't shield a professional from personal liability for their own negligence in providing professional services. The protection is generally limited to the corporation's ordinary business liabilities, not the standard of care owed to clients or patients.
Can I sell shares in my professional corporation to a business partner who isn't licensed?
It depends entirely on your governing body's rules. Many restrict share ownership to licensed members of the profession, with narrow exceptions in some professions for certain family members. Confirm your specific regulator's requirements before assuming an arrangement is permitted.
Do professional corporations pay less tax than operating as a sole practitioner?
Sometimes there are potential advantages, but this depends on current tax rules, your income level, and your personal circumstances. It needs a proper conversation with your accountant, not a general assumption.
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