A significant number of accountants choose to operate their practice through a professional corporation (“APC”) under the Ontario Business Corporations Act and the Chartered Professional Accountants of Ontario Act. Once an APC is incorporated, it must register with Chartered Professional Accountants (CPA Ontario) and obtain a Registration Certificate in order to practice. If the APC intends to practice public accounting in Ontario, then a Certificate of Authorization issued by CPA Ontario is also required. To obtain a Certificate of Authorization, at least one shareholder of the APC must hold an active public accounting license (“PAL”), which needs to be renewed annually, at least 30 days prior to its expiration on October 31 of each year. If the PAL is not renewed, the Certificate of Authorization will be cancelled, and the APC will no longer be permitted to engage in public accounting.
An APC has an obligation to notify CPA Ontario of any significant changes to the practice, composition or structure of the APC prior to or within 30 days of such change. A significant change may include a change to the firm name, the shareholders, director, officers, articles of incorporation or dissolution of the APC. Failure to notify CPA Ontario of any such change may result in a revocation of the Certificate of Registration, and the APC may no longer be permitted to practice.
The name of the professional corporation must comply with the requirements under the Ontario Business Corporations Act as well as the bylaws and regulations of CPA Ontario. Prior to incorporating an APC, it is recommended by CPA Ontario that the proposed name of the professional corporation be submitted for pre-approval. In order to obtain pre-approval of a firm name, it is necessary to submit an application to the Registrar through the portal on the CPA Ontario website, and specific information with respect to the professional corporation must also be provided including the name of the members associated with the firm.
We routinely advise accountants on matters involving the incorporation, creation and maintenance of a professional corporation, to ensure regulatory compliance with CPA Ontario, laws and regulations. The professional’s relationship with his or her professional corporation will be as an employee. We assist in preparing an employment agreement that will provide flexibility on choosing compensation arrangements. However, the accountant still has personal professional responsibility to his or her clients.
Incorporating a professional corporation can bring significant advantages, including being taxed at a lower corporate tax rate compared to a personal tax rate, the payment of dividends to shareholders, and tax deferral strategies. We routinely provide advice to accountants about what types of shares may be issued to shareholders. Only an accountant who is licensed by CPA Ontario may hold shares in the APC. However, the shares of an APC may be held by a holding corporation provided all shares of the holding corporation are held by individuals holding licenses issued by CPA Ontario. We work directly with tax advisors and accountants to ensure that the most appropriate corporate structure is established in order to achieve long term goals.
If you would like more information on our services or how we can help, please feel free to contact us.
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As you progress in your career, your estate plan may become more complex. Dual Wills may be used to protect certain eligible assets from estate and administration tax.
