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Which professions can operate a professional corporation?
To operate your practice as a Professional Corporation (PC) you must be a member of a profession whose association allows its members to practice through a corporation.
Legislation typically requires that only those professions that are governed by a professional governing body or association as provided by law can incorporate a professional corporation.
Each province has different laws and rules as to which professions have these governing bodies. Generally, professions that can incorporate a professional corporation include: Accountants, Architects, Engineers, Attorneys, Physicians, Dentists, Psychologists, Social Workers, Veterinarians and Engineers among others.
Business vs Professional Corporations: What the difference?
A professional corporation resembles a business corporation, requiring compliance with corporate law, but also the rules and regulations of professional licensing bodies.Professional corporations offer tax advantages but have don’t offer the same level of limited liability protection as typical business corporations. Here are some differences:
Ownership Conditions
All ownership shares (or a minimum percentage) must be owned by licensed individuals licensed in the profession. Some associations allow for immediate family to own shares.
Directorship Restrictions
At least one director (or a majority, or even exclusively) must be licensed in the profession.
Activities limited to Profession
The articles of incorporation limit the activities of the corporation to the profession.Professional corporations are typically required to use the name of the professional as part of the corporate name and have the words "Professional Corporation" as part of its legal name. For example “John Smith Lawyer Professional Corporation”.
Liability Issues
A professional corporation offers its shareholders limited liability in certain areas. A shareholder is not liable for the “business” operating debts and liabilities of the PC. However, agents of the corporation may be held personally responsible for liabilities arising out of their services to the corporation. Malpractice insurance can be purchased by the corporation to cover agents for liabilities arising out of their services to the corporation.
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