Professional Corporation Incorporation in Ontario for $35, Prepared by a CPA Firm

Who can incorporate a professional corporation in Ontario

The professions the Business Corporations Act allows

A professional corporation is available to professions whose governing law allows members to practise through a corporation. The regulator then decides whether to authorize it.

Doctors, dentists, lawyers, accountants and pharmacists, and why engineering is not on this list

Physicians, dentists, lawyers, accountants and pharmacists can all practise through a professional corporation. See incorporation for doctors and physicians in Ontario. Engineering works differently: Professional Engineers Ontario issues a Certificate of Authorization to any business that offers engineering services to the public, and that business is normally an ordinary corporation.

Professions and business types that cannot use a professional corporation

Unregulated businesses use an ordinary corporation. A personal real estate corporation for a realtor is a separate regime. See personal real estate corporations.

The certificate of authorization from your regulator

What a certificate of authorization is and why the corporation cannot practise without one

It is your regulator’s permission for the corporation to practise. Without it, the corporation is an ordinary company that cannot bill for professional services.

The order of events, which is incorporate first and apply to the regulator second

The College of Physicians and Surgeons of Ontario states that articles must be filed with the ministry before you apply for a certificate of authorization. The same order applies to dentists and other professions.

What each regulator asks for in the application

Expect your certificate of incorporation, the articles, a corporation profile report and signed shareholder undertakings. See incorporation for lawyers in Ontario for the Law Society route.

What happens if you bill through the corporation before the certificate is issued

Do not do it. The Royal College of Dental Surgeons of Ontario states that dental fees may not run through a health profession corporation until its certificate of authorization is issued.

Naming a professional corporation

The surname requirement and the words “Professional Corporation”

The College of Physicians and Surgeons of Ontario requires the physician’s surname as it appears on the register, optional given names or initials, and the words “Medicine Professional Corporation”, such as Smith Medicine Professional Corporation. No other words are allowed.

Why a numbered company does not work for a professional corporation

Because the name must carry a surname, a professional corporation cannot be a numbered company. Why a numbered company will not work here.

The restricted words for engineering

An engineering corporation that uses “engineering” or “engineers” in its name needs a letter of consent from Professional Engineers Ontario first.

The Ontario-biased NUANS report and the 90-day rule

An Ontario professional corporation needs an Ontario-biased NUANS report. A Canada-biased report is not accepted, and the report cannot be dated more than 90 days before the articles are filed.

Who is allowed to own the shares

Voting shares and the same-profession rule

Section 3.2 of the Business Corporations Act (Ontario) requires the shares to be owned, directly or indirectly, by members of the same profession. Voting shares in a medicine corporation must be owned by members of the College of Physicians and Surgeons of Ontario.

Non-voting shares for family members in medicine and dentistry

The Ontario health profession corporations regulation, O. Reg. 665/05, lets a spouse, child or parent of a voting physician or dentist hold non-voting shares. See incorporation for dentists in Ontario.

Shares held in trust for minor children

Non-voting shares in a physician or dentist corporation can also be held by trustees for the minor children of a voting shareholder.

What happens when a shareholder retires, loses a licence or dies

The shares must be dealt with under your regulator’s rules, and the regulator must be told about shareholder changes. Plan this in the share terms from day one.

What a professional corporation costs

Our fee is $35.00, HST included

Our fee covers the CPA review and the preparation and filing of your articles. See every fee, ours, the registry’s and your regulator’s.

The $300 Ontario government filing fee

The Ontario Business Registry charges $300 to file Articles of Incorporation online. See incorporate in Ontario for $35 plus the $300 registry fee.

The regulator’s certificate of authorization fee, which is separate again

Your regulator charges its own fee, paid directly to it. The College of Physicians and Surgeons of Ontario publishes a $400 application fee and a $175 annual renewal fee.

How we prepare and file your professional corporation

The intake form and the share structure conversation

You tell us your profession, your regulator and who should hold shares. A CPA confirms what your regulator allows.

Drafting articles that satisfy the OBCA and your regulator at the same time

The name, the share classes and the limit on the business are drafted together, so the registry and the regulator see the same documents.

Filing, the certificate of incorporation and your regulator application pack

We file online, send your certificate of incorporation, and give you the list of documents for your certificate of authorization application.

What a professional corporation does not protect you from

Professional negligence stays with the professional

Section 3.4 of the Business Corporations Act (Ontario) says a member’s liability for a professional liability claim is not affected by practising through a professional corporation.

Commercial liability, leases and employment claims

What the corporation can limit is ordinary business exposure, such as an equipment lease, a supplier contract or an employment claim against the corporation.

The insurance your regulator still requires

Incorporating does not replace professional liability insurance. Keep it in place.

The tax reasons to incorporate, and the ones that do not apply to you

The small business deduction and the tax deferral

A professional corporation can claim the small business deduction on up to $500,000 of active business income and keep profit it does not need inside the company.

Tax on split income and why family shares are not an automatic dividend plan

Section 120.4 of the Income Tax Act decides whether a dividend to a family member is taxed at the top rate. A college allowing the share does not exempt the dividend.

HST, exempt supplies and why many health practices never register

Many health services are exempt from HST, so a practice can bill well past $30,000 and have nothing to register. Taxable sales, such as some reports and products, can still create an obligation.

When incorporating costs a professional more than it saves

If you need almost all your income to live on, the deferral is small and the extra filings cost more than they save. A CPA will tell you.

Annual renewal and everything due every year

Renewing the certificate of authorization with your regulator

Each regulator sets its own date. The Royal College of Dental Surgeons of Ontario states that all certificates of authorization expire on 31 August each year. The Ontario College of Pharmacists requires renewal on or before 10 March. See what is due after your certificate arrives.

The Ontario Initial Return within 60 days and the Annual Return within six months

Both are filed in the Ontario Business Registry at no government fee. Since 15 May 2021 the Annual Return is no longer filed with the T2.

The minute book, the register of individuals with significant control and the T2

Private Ontario corporations must keep a register of individuals with significant control, and the T2 corporate return is due to the Canada Revenue Agency every year.

Professional corporation against an ordinary corporation

Name, ownership and regulator oversight compared

A professional corporation carries your surname and the words “Professional Corporation”, its shares are limited to your profession and permitted family, and your regulator oversees it. An ordinary corporation has none of these limits.

Tax treatment compared

Both pay corporate tax and can claim the small business deduction. A professional corporation usually cannot sit under a holding company, so investments often stay inside it, and passive income above $50,000 starts to reduce the small business limit.

Which one a CPA recommends, and when

If you practise a regulated profession that allows it, a professional corporation is the only way to bill professional fees through a company. Everything else uses an ordinary corporation.