Incorporating an Accountant Professional Corporation in Calgary

Contact our law firm for your incorporation legal work at 403-400-4092 or Chris@NeufeldLegal.com

Given that chartered professional acountants by their education and training are well aware of the tax advantages associated with operating through a corporate entity, many chartered professional accountants choose to operate their accounting practice through a professional corporation under the Business Corporations Act (Alberta) and the Chartered Professional Accountants Act (Alberta). The incorporation of the professional corporation is undertaken in conjunction with the accounting profession's provincial regulatory body, CPA Alberta, and follows very particular specifications as to the incorporation of an accountant's professional corporation.

Our law firm routinely advises Calgary professionals, including accountants, on the establishment of their professional corporation, together with other corporate and legal strategies and structures to optimize the business potential of their professional practice, while limiting their exposure to legal liability and other challenges arising from engaging in their profession and developing their own commercial business. In this regard, our legal work intersects with your own tax and accounting work, as we are providing the legal structure through which you are seeking to capitalize on the tax advantages available to a corporate entity through the Income Tax Act (Canada).

Nevertheless, from a legal standpoint, the professional corporation that you are permitted to utilize for your accounting practice does not share the non-tax benefits that are available to regular corporations that you are regularly engaged with during the course of your accounting practice. Instead, professional liability remains for yourself personally even when you've incorporated as a professional corporation. This was the trade-off associated with incorporating a professional corporation and attaining the associated tax advantages, with the accountant not attaining the benefit of the corporate veil with respect to their professional activities, such that you remain personally liable for your professional malpractice and negligence. As such, your personal assets remain at risk for any professional malpractice claims that exceed your insurance coverage (which is really no different from undertaking your accounting practice in your personal capacity, with no professional corporation).

At Neufeld Legal, we have the experience and insight to assist you in structuring your professional accounting practice as a Professional Corporation. As such, when you are looking to incorporating a new professional corporation or dealing with its ongoing corporate development, we welcome you to contact our law firm at 403-400-4092 or via email at Chris@NeufeldLegal.com.

 

Potential Tax Advantages of an Accountant Professional Corporation in Alberta
Tax Strategy	Alberta PC Advantage	Key Considerations & Regulations
Small Business Deduction (SBD)	Access to a combined corporate tax rate of 11% (9% federal + 2% Alberta) on active business income up to the $500,000 threshold, leaving more capital in your practice.	Significantly lower than top personal rates (up to 48% in AB). SBD scales down if corporate passive investment income exceeds $50,000 annually.
Tax Deferral Opportunities	Retain unallocated profits inside the corporation to compound corporate wealth at low active business rates rather than taking high personal distributions.	Personal income tax is deferred until capital is distributed as personal salary or dividends to the accountant.
Flexible Remuneration Mix	Tailor annual compensation dynamically between T4 salary (generating RRSP room & CPP eligibility) and non-eligible dividends to suit personal cash flow needs.	All voting shares must strictly remain held by active members of CPA Alberta. Non-voting equity shares are governed under CPA regulations.
Lifetime Capital Gains Exemption (LCGE)	Potential tax-free capital gains treatment upon the eventual sale or disposition of Qualified Small Business Corporation (QSBC) practice shares.	Requires careful adherence to share-holding duration requirements and active asset allocation tests under the Income Tax Act.
Individual Pension Plans (IPPs)	Ability to fund corporate tax-deductible contributions into a dedicated registered pension structure specifically designed for incorporated practice owners.	Offers higher annual tax-deductible contribution limits than conventional RRSPs for senior, high-earning CPA professionals.
Deduction of Health & Wellness Expenses	Fund health and dental claims tax-free via a corporate Health Spending Account (HSA), converting non-deductible personal medical bills into 100% deductible business expenses.	Must be properly structured as a qualified employee benefit plan complying with Canada Revenue Agency guidelines.
Corporate Life Insurance & Capital Dividend Account (CDA)	Utilize low-tax corporate dollars to fund life insurance policies; payout proceeds flow through the CDA to surviving shareholders completely tax-free.	Provides key person coverage and estate-planning benefits without requiring high post-tax personal income to cover premium payments.