# Should You Practice Through a Professional Corporation in Ontario or Alberta?

> In Ontario and Alberta, incorporating your practice as a professional corporation is optional, not required, and only available if your governing body and profession-specific law permit it. It offers tax deferral but exposes you to CRA's Personal Services Business and Tax on Split Income rules, and it does not shield you from partnership-level liability in Ontario.

Published 2026-08-09 · Last reviewed 2026-07-31 · [Canonical page](https://canadalegalcenter.ca/articles/should-i-practice-through-a-professional-corporation/)

Legal information, not legal advice.

**It depends: a professional corporation is only available if your profession's governing law permits it, and even when it's available, it does not automatically shield you from liability or guarantee a lower tax bill.**

Whether you can practice through a professional corporation at all is decided by two things: the corporate statute in your province and the specific act governing your profession. Neither Ontario nor Alberta lets any regulated professional simply file articles of incorporation and start billing through a corporation.

## Can Your Profession Incorporate at All?

In **Ontario**, the Business Corporations Act says a corporation may only practise a regulated profession if that profession's own governing Act expressly permits corporate practice, or the profession is listed under Schedule 1 of the Regulated Health Professions Act, 1991, named in a specific act like the Chartered Professional Accountants of Ontario Act, 2017, or covered by a prescribed Act (RSO 1990, c B.16, s 3.1(2)). If your profession's governing act is silent, incorporation isn't an option.

In **Alberta**, the mechanism is different: before a corporation's name can include the words "Professional Corporation," the incorporator must send the Registrar evidence, less than two years old, that the profession's own governing body approved the articles of incorporation (Business Corporations Act, RSA 2000, c B-9, s 7(2)). Alberta also restricts the "Professional Corporation" designation to a specific list of qualifying professions rather than opening it to all regulated occupations (Government of Alberta, "Incorporate an Alberta corporation").

For Alberta lawyers specifically, a "professional corporation" has a precise legal meaning: it is a corporation holding a permit issued under Part 8 of the Legal Profession Act (RSA 2000, c L-8, s 1(i)). That Part covers the permit requirement, how a permit can be terminated, shareholder and employee liability, and a prohibition on voting agreements with non-members (ss 129-136).

<div class="table-scroll">

| | Ontario | Alberta |
|---|---|---|
| Gateway | Profession's governing Act must expressly permit corporate practice, or profession falls under RHPA Schedule 1 / a named or prescribed Act (BCA, s 3.1(2)) | Governing body must approve the articles; evidence of approval (under 2 years old) goes to the Registrar (BCA, s 7(2)) |
| Who can hold shares | Members of the same profession only, directly or indirectly (BCA, s 3.2(2)) | Governed by the relevant professional statute (e.g., Legal Profession Act, Part 8, for lawyers) |
| Name requirement | Not addressed in the general BCA provisions cited here | Must include "Professional Corporation," restricted to specific qualifying professions |
| Filing/fees | Not verified for this article | Registry agents charge a government fee plus a separate service fee (Alberta.ca) |

</div>

## Incorporating Does Not Always Shield You From Liability

A common assumption is that a corporate structure automatically insulates a professional from personal liability. In Ontario, that assumption breaks down in one specific but important scenario: if the professional corporation is itself a partner in a partnership or limited liability partnership (LLP), its shareholders carry the same liability toward that partnership as if the shareholders were partners themselves (Business Corporations Act, RSO 1990, c B.16, s 3.2(6)). If you practise in a partnership structure, incorporating your own practice does not by itself remove that exposure.

## The Federal Tax Rules That Change the Math

Two federal tax rules, which apply the same way in Ontario, Alberta, and every other province, work against professional corporations in ways that are easy to underestimate.

First, the Tax on Split Income (TOSI) regime specifically excludes professional corporation shares from qualifying as "excluded shares," a category that would otherwise let family members receive dividends taxed at their own (often lower) rate. The Canada Revenue Agency's guidance defines a professional corporation for this purpose as one carrying on the professional practice of an accountant, dentist, lawyer, medical doctor, veterinarian, or chiropractor. Because those shares can't be "excluded shares," dividends paid to family shareholders are more likely to be taxed at the top marginal rate under TOSI rather than at the recipient's own rate.

Second, the CRA can classify an incorporated professional's corporation as a Personal Services Business (PSB), sometimes described as an "incorporated employee" arrangement. A PSB exists where the corporation provides services and the individual performing the work would reasonably be considered an employee of the payer if the corporation didn't exist. A PSB loses access to the small business deduction and the general tax reduction, and is subject to an additional 5% tax with limited expense deductions. Professionals who bill mainly one client, or who resemble an employee in substance, carry this risk.

## What to Check Before You Incorporate

- Confirm your profession's governing Act actually permits corporate practice (Ontario) or that your governing body will approve the articles (Alberta), before spending money on incorporation paperwork.
- In Ontario, confirm who is legally permitted to hold shares; membership in the same profession is required, which limits bringing in a spouse, adult child, or outside investor as a direct shareholder.
- In Alberta, budget for both the registry agent's government fee and its separate service fee, since incorporation is processed through private registry agents rather than a single flat government price.
- Have an accountant assess whether your income pattern risks PSB classification or loses the benefit of income splitting under TOSI before assuming incorporation will reduce your tax bill.

## What You Can Do Next

Before incorporating, professionals typically confirm eligibility and process directly with their governing body (the College, Law Society, or equivalent regulator for the profession), since that body's approval or certificate is the gating step in both provinces. A corporate/commercial lawyer can confirm which shareholders and structures are permitted under the applicable Business Corporations Act provisions, and an accountant familiar with CRA's PSB and TOSI rules can model whether the tax result is likely to be favourable given your billing pattern and income needs.

## Frequently asked questions

**Does incorporating protect me from malpractice or partnership liability?**

Not fully. In Ontario, if your professional corporation is a partner in a partnership or limited liability partnership, the shareholders carry the same liability toward that partnership as if they were partners personally (Business Corporations Act, RSO 1990, c B.16, s 3.2(6)). Incorporation does not erase that exposure.

**Can I add my spouse or children as shareholders to split income?**

In Ontario, all shares of a professional corporation must be legally and beneficially owned, directly or indirectly, by members of the same profession (Business Corporations Act, RSO 1990, c B.16, s 3.2(2)), which limits adding a non-professional spouse or child as a direct shareholder. Federally, professional corporation shares are also excluded from the Tax on Split Income (TOSI) 'excluded shares' exemption, which limits the tax benefit of any income splitting that is structured.

**Will incorporating always lower my tax bill?**

Not necessarily, and this is a federal issue that applies regardless of province. The Canada Revenue Agency (CRA) can classify an incorporated professional's corporation as a Personal Services Business if the individual would reasonably be seen as an employee of the payer without the corporation; that classification strips the small business deduction and general tax reduction and adds a 5% tax.

**Are the incorporation rules the same in Ontario and Alberta?**

No. Ontario ties eligibility to whether the profession's governing Act expressly permits corporate practice or falls under the Regulated Health Professions Act, 1991 Schedule 1 or a named/prescribed Act. Alberta requires the incorporator to submit evidence, less than two years old, that the profession's governing body approved the articles before the corporation's name can include 'Professional Corporation.'


## Sources

1. [Business Corporations Act (Ontario)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-b16/latest/rso-1990-c-b16.html), RSO 1990, c B.16, ss 3.1(2), 3.2(2), 3.2(6) (retrieved 2025-06-01)
2. [Business Corporations Act (Alberta)](https://www.canlii.org/en/ab/laws/stat/rsa-2000-c-b-9/), RSA 2000, c B-9, s 7(2) (retrieved 2025-06-01)
3. [Legal Profession Act (Alberta)](https://www.canlii.org/en/ab/laws/stat/rsa-2000-c-l-8/latest/rsa-2000-c-l-8.html), RSA 2000, c L-8, s 1(i) (retrieved 2025-06-01)
4. [Legal Profession Act (Alberta), Part 8](https://kings-printer.alberta.ca/documents/Acts/l08.pdf), RSA 2000, c L-8, Part 8 (ss 129-136) (retrieved 2025-06-01)
5. [Government of Alberta, Incorporate an Alberta corporation](https://www.alberta.ca/incorporate-alberta-corporation), Alberta.ca official guidance (retrieved 2025-06-01)
6. [CRA, Tax on split income - Excluded shares](https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/income-sprinkling/guidance-split-income-rules-adults/excluded-shares.html), CRA guidance, s 3-2 (retrieved 2025-06-01)
7. [CRA, What is a Personal Services Business](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-income-tax-return/tax-implications-personal-services-business/what-psb.html), CRA guidance (retrieved 2025-06-01)