Professional Corporation vs Regular Corporation in Canada: Requirements, Tax Rules, and Corporate Benefits with Open Corporation for $35

Open Corporation for $35 is a department of Gondaliya CPA. Understanding professional corporation vs regular corporation is essential for regulated professionals like physicians, dentists, lawyers, and engineers in Canada, as professional corporation requirements and corporate tax planning vary under the Business Corporations Act Ontario. Incorporating with Open Corporation for $35 offers guidance on shareholding limits, liability protection, small business deduction eligibility, and the specific tax benefits related to professional corporations, including TOSI rules and passive income considerations.

Quick Summary

A professional corporation is an ordinary Ontario corporation with extra rules: only licensed members, and for physicians and dentists their family, can own shares, the name must say “Professional Corporation”, and the regulator must issue a certificate of authorization. The tax rules are the same as for any other corporation.

Aspect	Details
Who uses it	Physicians, dentists, lawyers, CPAs and other professions whose Act allows it. Ontario engineers use a regular corporation with a PEO certificate.
Shareholders	Licensed members only. Physicians and dentists may add family members as non-voting shareholders.
Name	Must include “Professional Corporation” or “société professionnelle”.
Certificate of authorization	Issued by the regulator after you incorporate, renewed every year.
Liability	No protection from your own professional negligence.
Small business limit	$500,000, reduced once passive income passes $50,000 and gone at $150,000.
Ontario tax rates	12.2% on income eligible for the small business deduction, 26.5% above it. See our guide to Ontario professional corporations.

Reading time: 30 minutes.

The Numbers That Matter

What is a Professional Corporation?

Definition and Purpose

A professional corporation (PC) in Canada is a type of business set up for regulated professionals like doctors, lawyers, dentists, accountants, and engineers. It lets them practice their trade while limiting their personal liability. In Ontario, you must get a certificate of authorization from the right regulatory body to incorporate as a PC. This step makes sure only qualified people can use this structure.

Who Can Incorporate as a Professional Corporation?

Not every business can form a professional corporation in Ontario. Only certain regulated professionals who meet their regulator’s rules qualify. For example:

• Regulated professions include medicine (CPSO), dentistry (RCDSO), law (LSO), and accounting (CPA Ontario). Engineers (PEO) practise through a regular corporation that holds a PEO certificate of authorization instead.
• To form a PC in Canada, you need to:
  • Include “Professional Corporation” in the company name.
  • Have shareholders all from the same profession.
  • Get a certificate of authorization from your profession’s regulator.

Knowing these points helps explain why some jobs must use professional corporations instead of regular business entities.

What is a Regular (Standard) Corporation?

General Business Corporation Overview

A regular corporation is any typical business formed under provincial or federal laws that isn’t part of regulated professions. Unlike PCs, these corporations have fewer rules about ownership and management. They offer more freedom to run the company as you see fit.

In Ontario, starting a regular corporation involves paying registration fees to the government. You’ll also file an annual return, which has no government fee, to keep it active. These costs vary but usually cost less than forming special entities like PCs.

Industries and Professions Covered

Regular corporations work in many fields that don’t need tight regulation. Examples include:

• Retail stores
• Tech companies
• Construction firms
• Hospitality services

Basically, any legal business without strict licensing fits here.

Unlike professional corporations that some occupations must use, regular corporations suit many other sectors well. Still, knowing your industry’s rules helps you pick the best corporate type for your business across Canada’s wide economy.

Key Differences Between Professional Corporations and Regular Corporations

Distinct Legal Structures

A professional corporation in Canada exists for licensed professionals like doctors, lawyers, dentists, engineers, and accountants. Regular corporations can run almost any legal business under laws like the Ontario Business Corporations Act (OBCA). Professional corporations, though, are limited to practicing the specific profession they represent.

The big difference between a professional corporation vs regular corporation is how they’re regulated. A professional corporation must follow corporate law and rules set by their professional body. This means only qualified members can own shares and carry out business activities related to their profession.

Regular corporations have more freedom. They can have any owner and do a wider range of business activities without strict rules. Choosing between a regular corporation vs professional corporation usually depends on the requirements of the profession’s regulator.

In short:

• Professional Corporation Canada: Only licensed pros; stricter rules.
• Regular Corporation: Open to all; fewer limits on ownership or naming.

This difference impacts liability, taxes, who can own shares, and naming rules.

Ownership and Shareholding Differences

Who can own shares shows clear contrasts. In a professional corporation, only licensed professionals may hold voting shares as per OBCA section 3.2(1). For example:

• Some physicians’ family members can have non-voting shares if allowed by medical college rules.
• Dentists may issue non-voting family shares following Dentistry Act guidelines.
• Holding companies face tight limits when owning shares in these corporations depending on provincial laws and regulator policies.

These rules keep control with licensed professionals meeting their regulators’ standards.

Shareholder Type	Allowed in Professional Corporation?	Share Class	Authority
Licensed Professionals	Yes	Voting Shares	OBCA ss 3.2; Regulator Acts
Family Members (Non-Voting)	Sometimes*	Non-Voting Shares	Medicine / Dentistry Acts
Holding Companies	Restricted	Varies	OBCA & Profession Acts

*Needs specific approval from regulators.

Family non-voting shares add some flexibility but need close checks against professional corporation requirements Canada, especially with yearly certificate-of-authorization conditions.

Naming Conventions

Naming rules for professional corporations differ from regular ones because of consumer protection. Regulators issue certificates of authorization after you incorporate, and some approve the name first.

Professional corporations must use “Professional Corporation” or the French “société professionnelle” in their name under the OBCA; abbreviations are not accepted. The name must clearly say what regulated service they provide without misleading people about what they do.

Before incorporation with the Ontario Business Registry:

• You need to meet your regulator’s naming rules, and some regulators approve the name first.
• Regulators check that names follow ethical standards and don’t confuse clients or patients.

Without a certificate of authorization, the corporation cannot practise the profession, and regulators might take action later.

Naming conventions protect clients while proving legitimacy through mandatory certification — a rule unique to professional corporation Canada versus regular companies.

Practice Restrictions

To incorporate as a professional corporation Canada, you must follow both corporate laws and strict profession-specific rules set by provinces—mainly Ontario’s OBCA sections 3.1–3.4 plus each profession’s governing statute like the Medicine Act (CPSO), Law Society Act (LSO), CPA Ontario Rules, etc.

Only certain professions can or must incorporate this way. Unregulated consultants can’t form these legally where regulation requires otherwise.

Permitted activities inside these corporations are tightly controlled:

• They must relate directly to the licensed practice.
• Unrelated commercial businesses are not allowed unless explicitly permitted.
• Regulators also enforce ongoing compliance including annual renewals tied to insurance proof — think CMPA for doctors or LawPRO for lawyers.

This system keeps clients safe while clearly separating personal liability from company debts.

Governance and Oversight

Role of Regulatory Bodies

Regulatory bodies play a big role in overseeing professional corporation Canada. They decide who qualifies through certificates of authorization after you register with Ontario Business Registry or similar bodies elsewhere.

They watch shareholder qualifications closely to make sure only licensed pros control these companies. For example, CPSO governs doctors’ PCs while LSO oversees lawyers’ PCs.

Their oversight doesn’t stop after formation. They collect renewal fees every year and check insurance coverage continues to meet standards throughout operation.

Getting this certificate means your company follows legal rules plus ethical ones designed to protect the public better than normal companies without such oversight.

So,

Eligibility depends entirely on each regulator—not just filing papers with CRA or government ministries—and there’s no guarantee even then you’ll be accepted automatically.

Certificate of Authorization Requirements

You apply for a certificate by showing proof that shareholders hold valid licenses and your insurance meets required minimums per your profession’s guidelines.

For 2026, fees typically run about $500 CAD up front with renewals around $250 CAD depending on your location [Ontario Ministry Finance] [CPSO].

Renewals line up with fiscal deadlines. Miss them and penalties may affect your standing — which is crucial for staying compliant under professional corporation requirements Canada.

Active certificates stop unauthorized use of protected titles too. This keeps client trust strong when they hire certified practitioners working in professionally incorporated practices instead of unregulated ones.

Sharad Gondaliya, CPA (Canada & USA), has over 10 years helping Canadian business owners choose wisely when forming corporations respecting all regulatory steps involved here.

Open Corporation for $35 is part of Gondaliya CPA.

Certificate of Authorization and Regulatory Compliance

A professional corporation in Canada has to get a certificate of authorization before starting its work. This sets it apart from regular corporations, which don’t need this certificate. The certificate shows that the corporation follows all professional corporation requirements Canada demands. These rules limit what kind of business activities the corporation can do, usually tied closely to its regulated profession.

In Ontario, the Ontario Business Corporations Act (OBCA) sections 3.1 to 3.4 cover these rules. Professional corporations answer directly to their governing bodies, unlike regular corporations. These regulators watch over licensing, the company name, and who can own shares.

Without this certificate, the corporation risks penalties or losing its status. So, meeting these rules is a must for any professional corporation and keeps it different from a regular one.

Obtaining and Maintaining Authorization

To form a professional corporation in Ontario or other provinces, you first need a certificate of authorization from your profession’s regulator. This happens after you file your incorporation papers.

Keeping this certificate active means renewing it every year. You must show proof you still have your license and insurance as part of professional corporation requirements Canada. If you miss renewals, your corporate privileges could pause or stop altogether.

Regulators check:

• Shareholder eligibility
• Correct company name
• Proof of liability insurance

This helps keep only qualified professionals running their practice under these corporations and maintains public trust.

Governing Bodies and Their Rules

Profession	Regulator	Governing Law
Physicians	College of Physicians & Surgeons (CPSO)	Medicine Act
Dentists	Royal College Dental Surgeons (RCDSO)	Dentistry Act
Lawyers	Law Society of Ontario (LSO)	Law Society Act
CPAs	CPA Ontario	Chartered Professional Accountants Act
Engineers	Professional Engineers Ontario (PEO)	Professional Engineers Act (a regular corporation holds the certificate; no professional corporation)

Each regulator sets specific rules for professional corporations. These differ from professional corporation vs regular corporation structures, especially about who can own shares, what business activities are allowed, and naming rules under OBCA sections 3.1–3.4 or similar laws elsewhere.

Shareholding Rules and Restrictions

Share ownership in professional corporations is much stricter than in regular ones:

• Only licensed professionals can hold voting shares.
• Some allow family members to own non-voting shares if approved.
• Holding companies are usually not allowed unless rules say otherwise.

This keeps control in the hands of licensed pros accountable under their regulations.

Shareholder Eligibility at a Glance

Shareholder Type	Allowed?	Share Class	Professions Covered
Licensed Professionals	Yes	Voting Shares	All regulated professions
Family Members (non-professional)	Limited	Non-Voting Shares	Physicians & Dentists only
Holding Companies	Restricted	Depends on Regulator	Often prohibited

Simply put: regulators limit shareholders tightly in professional corporations compared to regular ones where anyone can own shares.

Who Can Be a Shareholder

Only people with valid licenses from their professional college or association usually qualify as shareholders with voting rights. Some exceptions exist for family via non-voting shares but these are carefully controlled because of tax rules like TOSI (Tax on Split Income).

Family members who get non-voting shares often include spouses or kids but they can’t vote or manage the company directly. This setup tries to balance passing down ownership while keeping strong regulatory controls intact.

Family Member and Non-Professional Involvement

Letting family members hold shares can get complicated:

• Family can own non-voting shares without breaking shareholding limits.
• But money paid to these family-held shares may trigger CRA’s TOSI tax unless certain conditions are met.

It’s wise for professionals to get advice since tax effects depend on personal situations plus changing tax policies around passive income inside incorporated practices.

Incorporation Process and Required Documents

1. Do an NUANS name search to check that your name is unique under OBCA rules.
2. Prepare articles of incorporation that say “Professional Corporation” exactly as required.
3. File your paperwork online with the Ontario Business Registry and pay fees.
4. Apply separately for the certificate of authorization from your regulator before working through the new company.

Services like Open Corporation for $35 help you file online with all forms including NUANS reports needed for smooth setup according to professional corporation requirements Canada standards.

Filing Articles of Incorporation

Your articles must clearly state you’re forming a “Professional Corporation” as per OBCA section 3(1)(a). They also list share classes limited only to eligible professionals based on rules for each profession.

If articles don’t meet these standards, registration could be rejected either when you file or later during checks by government officials along with regulators.

You submit articles digitally through ServiceOntario’s Business Registry site with required fees—separate from any service provider charges like those from Open Corporation helping with paperwork specifics for regulated businesses versus ordinary ones.

Required Information and Supporting Documents

• A corporate name confirmed by a current NUANS report specific to Ontario
• ID info verifying all incorporators’ licenses match official records
• A statement saying your business will only do activities allowed under relevant laws

Documents vary by province but always focus on legal compliance plus unique industry rules set by each regulator about regular corporation vs professional corporation differences.

Special Requirements by Province

While federal tax laws stay consistent across Canada for small businesses, provinces have their own twists on process details:

• Quebec requires extra filings because its Civil Code governs naming differently than common law provinces like Alberta or BC.
• Manitoba demands stricter annual reports tied directly into its registry.
• Nova Scotia asks for periodic insurer confirmations beyond basic certificates used elsewhere.

These differences mean practitioners should check local rules early if planning cross-provincial operations—even though core elements defining any Canadian professional corporation requirements Canada-wide remain quite similar overall.

Limited Liability Protections

Professional corporations and regular corporations are quite different when it comes to liability protections in Canada. A professional corporation Canada must be owned and run by members of a regulated profession. It has to follow strict professional corporation requirements Canada, like those under the Business Corporations Act (Ontario) ss. 3.1–3.4.

Regular corporations usually protect shareholders from business debts and liabilities. But with professional corporation vs regular corporation, the rules differ. Professional negligence isn’t covered by the corporation’s protection. So, while a professional corporation protects personal assets from general business risks, it doesn’t cover claims about malpractice or errors in professional work.

On the other hand, a regular corporation vs professional corporation gives broader limited liability for shareholders. Regular corporations can run any lawful business without limits on who owns them or what they’re called. But you can’t use a regular corporation if the law says you have to form a professional one.

In short, both types protect against most business risks but only regular corporations protect fully except for some specific exceptions.

What Corporations Protect Against

Corporations mainly protect owners from financial risks tied to company debts—not personal wrongdoing or breaking rules.

When comparing professional corporation vs regular corporation:

• Both stop creditors from going after personal assets for company debts like loans and leases.
• Neither type shields professionals from malpractice or negligence claims.
• Professional corporations face more oversight by regulators who enforce extra standards.

Regular corporations protect mainly against creditor claims related to normal business operations. They don’t have special shareholder limits or need licensing certificates.

So, whether you choose either type, your risk for losses drops—but you stay responsible for your own professional actions.

Protection Aspect	Professional Corporation	Regular Corporation
Personal asset protection	Yes (except malpractice)	Yes
Malpractice/negligence coverage	No	No
Regulator oversight	Yes	No
Shareholder eligibility	Restricted	Open

Source: OBCA ss. 3.1–3.4; Regulated Health Professions Act; Income Tax Act

Personal Professional Liability

Even if you run your business as a professional corporation Canada, you stay personally liable for your own actions.

That’s because provincial colleges or licensing bodies like CPA Ontario or CPSO want professionals to keep full accountability. Incorporation helps with tax and admin stuff but does not change that rule.

You can be held personally responsible for:

• Negligent acts
• Ethical violations
• Regulatory penalties against you as an individual

The company might have insurance—for example, LawPRO for lawyers or CMPA for doctors—that covers some risks. But this doesn’t shift blame from the professional when they make mistakes.

So forming a professional corporation Canada meets legal rules but doesn’t remove personal responsibility set by each profession’s regulations.

Malpractice and Negligence Issues

Malpractice claims aren’t covered by incorporation in Canada—whether it’s a professional or regular corporation.

That means:

• Setting up a professional corporation doesn’t stop lawsuits for medical errors, legal mistakes, accounting faults, or engineering problems.
• Regulators require insurance that covers these risks alongside yearly certificates of authorization per profession.

For example:

Doctors incorporated under Ontario’s Medicine Act must keep CMPA membership to cover clinical negligence even after forming their professional corporation. Similarly,

Lawyers governed by Law Society rules need LawPRO insurance no matter if they work via regular or professional corporations [Regulated Health Professions Act].

These rules make sure clients get protection no matter how providers organize their business. And professionals get tax benefits through properly formed entities following all professional corporation requirements Canada.

Sharad Gondaliya, CPA (Canada & USA), has 10+ years helping Canadian business owners.

Open Corporation for $35 is part of Gondaliya CPA.

Small Business Deduction and Passive Income

Professional corporations and regular corporations in Canada share many tax rules. Both can qualify for the small business deduction (SBD). But professional corporation requirements Canada add some specific rules that affect how taxes apply.

Eligibility for the Small Business Deduction

Both types of corporations may be Canadian-controlled private corporations (CCPCs). That status lets them claim the federal small business deduction under section 125 of the Income Tax Act. This deduction lowers the tax rate on active business income, up to $500,000 per year federally and in Ontario.^[1][2]

To qualify, a corporation must meet:

• CCPC status: It has to be privately controlled by Canadians.
• Active business income: Income must come from an active Canadian business.
• Professional corporation requirements Canada: Regulators decide if a profession must form a professional corporation. This doesn’t affect SBD eligibility but sets rules for naming, shares, and allowed activities under OBCA ss. 3.1–3.4.

Both professional and regular corporations get the small business deduction if they meet CCPC rules.^[3] The CRA decides eligibility based on facts like who controls the company.

Passive Income Rules and Impacts

Passive income inside a corporation affects the SBD limit. Since 2019,^[4] CCPCs lose part or all of their $500,000 federal SBD when their adjusted aggregate investment income goes over $50,000.

Here’s what matters:

• Both professional corporations vs regular corporations follow the same passive income rules.
• Adjusted aggregate investment income includes things like interest, dividends (not from connected businesses), rental income unrelated to active work, and some royalties.
• For each dollar over $50,000 in passive income, the SBD limit shrinks by $5. It disappears entirely at $150,000.^[5]

Professionals using professional corporations need to watch passive income carefully. Too much passive earning cuts down on their low tax rates for active profits.

Ontario Corporate Tax Rates and Professional Corporation Tax Filing

Ontario corporate tax rates apply equally to both professional and regular CCPCs.^[6] As of 2026:^[7]

Income Type	Federal Rate (%)	Ontario Rate (%)	Combined Rate (%)
Active Business Income*	9	3.2	12.2
General Corporate Income†	15	11.5	26.5

* Up to $500K qualifying for SBD

† Above SBD limit or non-active/business income

Professional corporation tax filing uses normal T2 forms required by CRA. Still, regulators may require extra steps like yearly certificate renewals under OBCA ss. 3.1–3.4.^[8] These filings report taxable income including capital gains or rental earnings tied indirectly to practice assets.

The main differences between regular versus professional corporations come from regulatory rules — not tax rates themselves.

1. Income Tax Act s125 – Government of Canada
2. Ontario Ministry of Finance – Corporate Tax Rates
3. CRA Guide T4012 – CCPC Status
4. Department of Finance Canada Budget Implementation Act Amendments – Passive Investment Rules
5. Income Tax Act s125(5.1)
6. Business Corporations Act (Ontario) Sections ss. 3.1–3.4
7. Finance Canada & Ontario Ministry Updates – Corporate Rates Effective Jan 2026
8. CPA Ontario Firm Registration Requirements & Compliance Guidelines

Please contact Open Corporation for $35 — a department of Gondaliya CPA — at info@gondaliyacpa.ca or call 647‑212‑9559 for expert guidance about your profession’s incorporation needs within current regulatory rules in Toronto and Ontario regarding these deductions and filing duties.

Comparison Summary – Small Business Deduction & Passive Income

Factor	Professional Corporation	Regular Corporation
Eligible for SBD?	Yes if CCPC criteria met	Yes if CCPC criteria met
Impacted by Passive Investment?	Yes; same thresholds apply	Yes; same thresholds apply
Regulator Influence	Controls incorporation & share limits only	No special regulator limits beyond general laws
Annual Certificate Fees	Required by profession’s regulator	Not required
T2 Filing	Standard CRA process + possible regulator reports	Standard CRA process

Verdict: Both professional and regular corps follow the same federal/provincial tax rules on small business deductions and passive income. The difference is mainly in regulatory compliance that shapes structure rather than tax treatment itself.

Practical Implications for Regulated Professionals

Incorporating a professional practice in Canada isn’t like setting up a regular business. It follows different rules. You can’t just choose to be a professional corporation because you want to. Each profession has its own laws about this. Knowing these details helps you avoid trouble and keep everything legal.

Incorporating as Physicians, Dentists, Lawyers, CPAs, Engineers

If you’re a physician, dentist, lawyer, CPA, or engineer, you have to follow specific rules when incorporating. For example:

• Only licensed members can own shares.
• Ontario’s Business Corporations Act sections 3.1 to 3.4 sets some of these rules.
• The name must include “Professional Corporation” or “société professionnelle”.

Each profession also has its own set of rules:

• Physicians: Must follow the Medicine Act and get approval from the College of Physicians and Surgeons of Ontario (CPSO).
• Dentists: Governed by the Dentistry Act.
• Lawyers: Rules come from the Law Society of Ontario.
• CPAs: Regulated by CPA Ontario.
• Engineers: Follow Professional Engineers Ontario (PEO) guidelines and practise through a regular corporation holding a PEO certificate of authorization, since engineers cannot form a professional corporation in Ontario.

Sometimes family members can hold non-voting shares if allowed.

Industry-Specific Requirements

Different professions require different paperwork and approvals before incorporating as professional corporations. Here’s how it looks:

Profession	Governing Law	Certificate Needed?	Shareholder Limits
Physicians	Medicine Act	Yes	Licensed doctors; limited family
Dentists	Dentistry Act	Yes	Licensed dentists; some family roles
Lawyers	Law Society	Yes	Licensed lawyers only
CPAs	CPA Ontario	Yes	Registered CPAs
Engineers	PEO	Yes (for a regular corporation)	No professional corporation; a licensed engineer must take responsibility for the engineering work

These rules keep business within proper limits and protect clients.

Regulatory Guidance

Regulators decide if you must incorporate professionally or if it’s optional. They give out certificates that say you can operate as a professional corporation. You usually renew these yearly with fees. Missing renewals might mean losing your right to practice under that structure.

It’s best to talk with your regulator early on since only they decide who qualifies—not the tax office or incorporation services.

Updates, Retirements, Name Changes, and Death of a Shareholder

When a shareholder retires, changes their name, or dies, you must notify your regulator quickly. This is more strict than with regular corporations.

Unlike normal corporations where shares move easily,

• Professional corporations need regulator approval for share transfers.
• You must submit proof showing compliance continues.

This keeps ownership legit according to law.

Steps for Corporate Changes

1. Get permission from licensing bodies first.
2. File amended articles at ServiceOntario.
3. Update internal records with resolutions.
4. Inform CRA if taxes or payroll are affected.

Doing this on time avoids penalties and loss of operating rights.

Notification and Documentation

Regular corporations file basic annual returns without checking who owns shares closely.

Professional corporations must provide detailed proof each year showing only licensed members own shares plus evidence of required insurance like malpractice coverage.

Failing this can bring fines or suspension until fixed according to rules in your province or territory.

Surrendering Certificate of Authorization and Relevant Notifications

If you stop using your professional corporation—for example winding down—returning the certificate from your regulator is necessary. This process differs from closing a regular business under OBCA alone.

You need to inform:

• The regulator who gave the certificate
• ServiceOntario Business Registry
• Canada Revenue Agency about when you stopped

This helps avoid future personal liability since negligence claims aren’t limited by having a corporation here.

When And How To Relinquish Authorization

To give up authorization, submit official requests often backed by board resolutions explaining why. Make sure all client obligations are settled first under ethical codes that work separately from corporate laws.

Timing matters so no unapproved practice happens once permission ends—this avoids legal trouble.

Transitioning To Regular Corporation Or Dissolution

Changing from a professional corporation into a regular one needs regulator okay because many professions only let members work through specific entities with “professional” in their names.

Ending the company follows normal dissolution rules but always requires checks that no disciplinary issues block closure.

Key points:

• Regulators control if conversion is allowed.
• Tax effects depend on CRA rulings separate from regulators’ decisions.

Comparing Professional Corporations And Standard Business Corporations

Table : Comparison At A Glance

Factor	Professional Corporation	Regular Corporation
Owners	Licensed professionals + limited family non-voting	Usually anyone
Laws	OBCA ss 3.1–3.4 + profession-specific acts	OBCA general
Naming	Must say “Professional Corporation”	Can use “Limited”, “Inc.” etc
Certificate Required?	Yes	No
Share Transfer Approval	Required	Not required
Liability Protection	Limited – doesn’t cover negligence	Standard commercial liability applies
Small Business Deduction	Same CCPC rules apply	Same CCPC rules apply
Tax Filing	Must file T2	Must file T2

*Subject to regulator approval; see details above.

Highlighting Key Differences And Similarities

Both pay similar taxes when they qualify as Canadian-controlled private corporations (CCPCs). But professional corporations face tighter ownership limits enforced by regulators who confirm every owner holds proper licenses.

Regular businesses enjoy more freedom transferring shares but don’t have access if their profession demands using special authorized structures only — that’s the main difference here between “professional corporation vs regular corporation.”

Changing A Professional Corporation To A Regular Corporation

To switch from a professional corporation to regular one needs clear OK from regulators since most regulated professions forbid working unless incorporated properly with professional status shown in name and setup.

The process includes giving up certificates then re-incorporating under standard OBCA rules without those extra limits.

Guidance, Official Resources, And Regulatory Bodies

Regulatory Guidance For Dentistry And Medical Corporations

Dentists and doctors wanting info on incorporating should check with their colleges — like RCDSO for dentists or CPSO for doctors. These groups offer clear instructions on what certificates are needed and how to keep them current after incorporation.

Source: RCDSO Guidelines / CPSO Policies

Open Corporation for $35 offers help navigating these complex corporate law details mostly found in OBCA sections 3.1–3.4 plus extra regulations that control how professionals form companies safely while staying legal throughout operation years.

Frequently Asked Questions (FAQs)

Essential Compliance Points for Professional Corporations

• Obtain and renew your regulator’s certificate of authorization annually to maintain corporate status.
• File annual returns with the Ontario Business Registry including updated director and officer details.
• Maintain valid professional liability insurance such as CMPA or LawPRO throughout operation.
• Ensure directors and officers hold valid licenses or meet exceptions defined by your regulator.
• Follow strict shareholder agreements restricting ownership to licensed professionals or approved family members only.
• Track passive investment income carefully to avoid phase-out of small business tax deductions.
• Apply GST/HST treatment properly under the Excise Tax Act Schedule V Part II where applicable.
• Comply with tax filing deadlines using T2 forms and submit additional reports required by regulatory bodies.
• Prepare for regular tax assessments ensuring all corporate activities align with specified corporate income rules under the Income Tax Act (2026).
• Abide by all regulatory oversight procedures including certificate renewal fees and any regulator-imposed penalties for non-compliance.

For detailed help, contact Open Corporation for $35 at info@gondaliyacpa.ca or call 647‑212‑9559.

• Small business limit: $500,000, the same for both types
• Passive income threshold: $50,000, with the limit gone at $150,000
• Ontario combined small business rate: 12.2%
• Ontario combined general rate: 26.5%
• Required name wording: “Professional Corporation” or “société professionnelle”
• Family shareholders: Non-voting only, physicians and dentists only
• Certificate of authorization: Renewed every year
• Our fee: $35 including HST, plus government fees

• For: Ontario physicians, dentists, lawyers and CPAs deciding whether to practise through a professional corporation and how to set up its shares.
• Not For: Ontario engineers and other professionals whose Act does not allow professional corporations; they use a regular corporation instead.

Professional Corporation Readiness Check

This quick self-check flags what to work through before you incorporate your practice. Please answer the six questions below.

What to Send Us

Send us your profession and regulator, the name you want, each shareholder’s licence status, whether family members will hold non-voting shares, and whether you are moving an existing practice into the corporation. That is enough for us to prepare your articles and tell you what your regulator will ask for. Please start on our incorporation form or see every fee on our pricing page.

Published: November 5, 2026  ·  Last updated: November 5, 2026

Editorial policy: Our content is prepared by our team and reviewed by Sharad Gondaliya, CPA, and we update it as OBCA rules, regulator requirements and corporate tax rates change.

Disclaimer: This article is educational information only and is not tax, legal, or financial advice. Gondaliya CPA Professional Corporation is a firm of Chartered Professional Accountants, not a law firm. Please consult a CPA before acting, and confirm current requirements with your regulator.

Open Corporation for $35 is a department of Gondaliya CPA.

Parent firm Gondaliya CPA Professional Corporation, CPA Ontario firm registration 61330051. Xero Partner Award Winner 2026. 1300+ five-star Google reviews. 30-day money-back guarantee and 60-day fee-matching policy. Phone 647-212-9559, email info@gondaliyacpa.ca, open 9:00 AM to 8:30 PM Monday to Sunday. Payment by Interac e-Transfer to info@gondaliyacpa.ca only, security question “Not Applicable” as auto-deposit is enabled. Card is also accepted.