If you are a regulated professional in Ontario you can practise through a corporation, but it will not protect you from a claim about your own work. What it changes is when and how you are taxed. Incorporation and certificate of authorization work, flat fee $1,128.87, taxes included.
Our charges include applicable taxes. Disbursements are extra and billed at cost — itemized upfront, in writing, never hidden.
From $1,128.87 taxes included
A professional corporation is an ordinary corporation under the Business Corporations Act (Ontario) with extra restrictions bolted on, plus a certificate of authorization from your regulator. Without the certificate you cannot practise through it, however properly it was incorporated.
The professions that may incorporate are set out in the OBCA and its regulations. They include lawyers and paralegals, physicians, dentists, chartered professional accountants, architects, professional engineers, veterinarians, chiropractors, optometrists, pharmacists, psychologists, social workers and massage therapists, among others. Each regulator then adds its own application process, forms and annual renewal.
The restrictions are real. The corporation may only practise the profession and carry on activities ancillary to it, so you cannot bolt a rental property or an unrelated consulting business into the same company. Officers and directors must be members of the profession. The name generally has to contain your surname as it appears on the regulator's register, plus the words "Professional Corporation".
Practising through a corporation does not limit your liability for your own professional negligence. If you make an error treating a patient or advising a client you are personally liable for it, and your regulator's discipline process reaches you personally. Ontario's professional corporation rules say a version of this explicitly.
What the corporation can contain is ordinary commercial liability: the office lease, equipment financing, staff contracts, supplier accounts. That only holds if you have not personally guaranteed them, and landlords and lenders usually ask, which puts you back where you started unless you negotiate.
So the reason to incorporate is tax and structure, not protection. Professional liability insurance is what protects you from claims, and it has to be maintained in the corporation's name wherever the regulator requires that.
Income earned in the corporation and left there is taxed at the small business rate, which is well below the top personal rate. That difference is a deferral, not a permanent saving. You pay the rest when you take money out as salary or dividends. The benefit is real when you consistently earn more than you spend and close to nil when you draw everything out each year.
The deferral buys flexibility: smoothing income across good and bad years, timing bonuses, funding an individual pension plan, retaining capital for equipment. It also adds cost, in the form of a corporate tax return, bookkeeping, payroll or dividend administration, minute book upkeep and an annual regulator renewal.
Income splitting is the part people still expect and mostly cannot have. Medicine and dentistry corporations may issue non-voting shares to a spouse, children or parents, but the tax on split income rules introduced in 2018 tax dividends paid to family members at the top rate unless a specific exclusion applies. Run the numbers with an accountant before assuming a dividend to a spouse saves anything.
HST depends on your profession, not on incorporating. Most health services are exempt; legal, accounting and engineering services are taxable. Incorporating changes who registers and files, not whether the tax applies.
The order matters. Name search, then incorporation with the restricted objects and share provisions your regulator demands, then organising resolutions and share issuance, then the certificate of authorization application. Regulators reject applications where the articles do not match their requirements, and amending articles afterwards costs money and weeks.
After that it is annual. Renew the certificate of authorization with your regulator, file the corporate annual return, file a T2 corporate tax return, and keep the minute book current for share transfers, dividends and director changes. Letting the certificate lapse while you keep billing through the corporation is a regulatory problem, not a paperwork one.
No. You remain personally liable for your own professional negligence and your regulator can discipline you personally. The corporation is not a shield for the work itself. It can hold ordinary business liabilities such as the lease and equipment loans, which is worth something, but only to the extent you have not personally guaranteed them. Your professional liability insurance is the actual protection.
It depends entirely on how much you leave in the company, not on what you bill. The benefit comes from deferring tax on income you do not need to spend. If you draw everything out each year for living costs, incorporation mostly buys you extra accounting fees. If you can consistently leave a meaningful amount inside, the deferral compounds. Have your accountant model your actual draw before you incorporate.
Only in some professions, and the tax result is not what it used to be. Medicine and dentistry corporations can issue non-voting shares to a spouse, children or parents. Most other professions require all shares to be held by members of the profession. Even where family shares are permitted, the tax on split income rules generally tax dividends to a family member at the top marginal rate unless they meet an exclusion, such as working meaningfully in the business.
Generally no. A professional corporation is restricted to practising the profession and activities ancillary to it. Investing surplus cash is usually permitted; carrying on a separate business is not. The common structure is a separate holding corporation, which also keeps investment assets away from practice creditors. That structure has its own tax consequences, so plan it before any money moves.
The certificate of authorization is surrendered and the corporation can no longer practise. It can usually continue to exist to collect receivables and hold retained earnings, but the name and objects generally have to change once it stops being a professional corporation. Plan this a year ahead, because how you extract the retained earnings is what drives the tax bill, not the wind-up itself.
Open your file tonight — a licensed Ontario lawyer will confirm everything with you by tomorrow.