Register a Professional Corporation
In 2001, Ontario passed a law allowing certain regulated professionals to incorporate their practices, e.g. accountants, veterinarians, etc. Each profession has a governing body overseeing its members and/or licensees, and the general administration of the profession. With respect to incorporating, each profession will have rules that vary slightly, but some of the common themes are that:
- Professionals may incorporate, and if they do, they must maintain appropriate corporate records.
- The governing body of the profession will maintain oversight of certification and licensing of each individual and professional corporation.
- The words “Professional Corporation” (or French equivalent) must be included in the name of the Corporation.
- Officers and Directors of a professional corporation must also be shareholders.
- The business activities of a professional corporation are restricted to the profession (e.g. lawyers can’t also sell widgets in the structure of their professional corporation).
How to Register a Professional Corporation
Professional Corporations cannot be numbered corporations, and you, therefore, must do a NUANS search report that will be submitted with your articles of incorporation. This search is done to determine if there are existing names that are too similar to your proposed name, which might cause confusion.
If the name search shows no conflicts, you can submit articles of incorporation to the government in compliance with the Business Corporations Act (Ontario) (or other provincial or federal legislation, as applicable), and in compliance with the rules and regulations of your applicable professional body.
Your professional corporation will need to ensure naming conventions mandated by your professional organization are observed, and that the officers, directors, and shareholders are all properly appointed and subscribed to the corporation. Certain professions, for example, physicians and dentists, allow for family members to be non-voting shareholders of professional corporations.
After filing your articles of incorporation, if everything is in order, you will receive your certificate of incorporation and (for corporations in certain provinces) be asked to file an initial return (due within 60 days), setting out certain corporate governance information. We can assist you in these steps and additionally prepare a minute book containing, corporate by-laws, director and shareholder resolutions and consents, share subscriptions, share certificates, registers, ledgers, a NUANS name search report and other corporate information. Your minute-book can be kept and maintained electronically or physically. The turn-around time for all of these steps is usually within 1 business day.
Platform Law helps professionals in all fields to register and set up their incorporations, to ensure compliance with renewal requirements, and to provide maintenance of corporate documents in compliance with applicable legislation.
After incorporating, you will need to prepare and file an application with your professional organization to obtain a certificate, which is essentially a license to practice under your corporation. The application typically consists of an application form, the certificate of incorporation, a signed declaration, a corporate profile report, and payment of an application fee, which vary depending on your profession.
Platform Law can prepare all the application materials on your behalf and submit them promptly to the applicable professional body. The processing timeline varies among professional bodies and can take between one day and several weeks.
Why Should I Incorporate a Professional Corporation, Why // Why Not?
All regulated professionals have the option of incorporating their practice as a professional corporation. No one is required to do this.
The key advantages of a professional corporation are potentially lower tax rates for corporations (including the small business deduction), possible pension plan and tax-deductible group health and life insurance, and limited personal liability (but not professional, for which you will have insurance).
The main disadvantages are increased administrative expenses and obligations, additional ongoing professional fees associated with updating corporate minutes and preparing financial statements/tax returns and book-keeping. There are also additional practice management considerations for certain professions that have different rules for corporations than for other business entities under which you may practice.
Other Practical Issues
If you are operating as a Professional Corporation, you are no longer self-employed but are instead an employee of the corporation (and you can pay yourself a salary and/or dividend – please consult with an accountant for your specific situation). Additionally, all of your paperwork and material should reflect the professional corporation rather than you personally, for examples, landlords, suppliers, and employees should be contracting with the corporation, and business cards and other marketing materials and documents should reflect the corporation.
If you give up membership in your professional organization, you will need to deal with your corporation accordingly, either by shutting it down or by transferring it to another licensee or member of your profession.
Platform Law advises professionals with respect to their professional obligations around marketing, their third-party contracts and helping them sell their practices (acting for either the buyer or the seller).
It would be our pleasure to help you!
This blog post is not intended as, and is not, legal advice or opinion.