Professional Corporation Accounting
Incorporation, salary-versus-dividend planning and ongoing compliance for incorporated professionals.
A professional in Québec may incorporate only where their ordre permits it, and the corporation must comply with that ordre's regulation on share ownership and naming. Professional liability is not limited by incorporation — the tax and structural benefits are the reason to do it.
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Key facts
| Permission required | From the professional ordre; not all professions may incorporate |
|---|---|
| Share ownership | Restricted by the ordre's regulation, often to members of the profession |
| Liability | Professional liability is not limited by incorporation |
| Tax benefit | Deferral on retained earnings, not a lower ultimate rate |
| Authorities | The professional ordre, Canada Revenue Agency and Revenu Québec |
Incorporating your practice opens up planning opportunities but adds compliance. A&S Financials helps Montréal professionals incorporate, plan their compensation mix, and keep the corporation in good standing with the CRA and Revenu Québec. We manage the corporate and personal sides together so nothing falls through the cracks.
Book a consultationHow we help
- Incorporation and by-law setup
- Salary-versus-dividend planning
- Corporate and personal tax filing
- Bookkeeping and payroll
- Investment and retirement planning
- Ongoing corporate compliance
The ordre's rules come before the tax analysis
Each professional ordre in Québec has its own regulation governing whether members may practise through a corporation, who may hold shares, how the corporation must be named, and what insurance must be carried. Some professions may not incorporate at all. Those rules frequently restrict share ownership to members of the profession, which limits the income-splitting structures available to other business owners. Where a family trust or a spouse holding shares is contemplated, the ordre's regulation decides whether it is possible before the Income Tax Act decides whether it is useful. Getting this order of operations wrong is expensive: a structure built for tax and then found non-compliant with the ordre has to be unwound, and unwinding can itself be a taxable event.
Deferral is the benefit, and it depends on what you leave in
The advantage of a professional corporation is deferral, not a permanently lower rate. Income taxed at the small business rate and retained inside the corporation compounds on a larger after-tax base; the balance is paid when it is drawn out. A professional who draws everything each year captures very little of that while carrying the cost of two corporate returns, financial statements and a payroll account. Where earnings genuinely exceed personal needs, the retained amounts accumulate — and eventually generate enough passive investment income to grind down the small business limit, which is usually the point at which a holding company enters the conversation.
Frequently asked questions
Does incorporating protect me from malpractice claims?
Can my spouse hold shares?
At what income does incorporating make sense?
Can I sell my professional corporation?
Speak with a Montréal CPA
Contact us to discuss your accounting and tax needs — in the language you prefer.