A professional corporation is a corporation engaged in providing professional services where a member of a profession governed by its professional body allows its members to practice through a corporation as opposed to a sole proprietorship or partnership. Each professional governing body may have its own set of rules requiring certain formalities to be respected. Some of the typical requirements of professional corporations are mentioned below. However, it is suggested that you contact your governing body before you proceed with the incorporation of a professional corporation.
Professions that can incorporate a professional corporation?
Each province has different laws and rules as to which professions have governing bodies. Generally, professions that can incorporate a professional corporation include: Accountants, Architects, Attorneys, Physicians, Dentists, Veterinarians and Engineers among others.
Incorporation and Operation
A professional corporation resembles a business corporation, requiring compliance with corporate law and the rules of professional licensing bodies. A professional corporation is formed in the same manner as a business corporation, except that it typically has one or more of the following additional limitations, depending on the provincial/Territorial jurisdiction:
1. All shares of stock of the corporation (or a minimum percentage) must be owned and held by individuals licensed in the profession of the corporation.
2. At least one incorporator must be licensed in the profession.
3. At least one director (or a majority, or even exclusively) must be licensed in the profession.
4. The articles of incorporation, in addition to all other requirements, must limit the activities of the corporation to the profession.
5. The professional corporation may be required to obtain from the appropriate professional body a certification that the shares of stock are owned by individuals who are duly licensed in the profession.
6. Professional corporations are typically required to use the name of the professional as part of the corporate name. They are also required to have the words “Professional Corporation” as part of its legal name.
At Alvox Accounting & Tax Services we have all necessary knowledge and experience to incorporate a professional corporation. Contact us today for more information and necessary paperwork to start with.