What is the primary value of utilizing a specialized lawyer to incorporate a professional corporation?

A specialized lawyer ensures that your corporate structure strictly satisfies both the Alberta Business Corporations Act and the rigid governing bylaws of your specific professional college or association. Professional legal oversight prevents costly application rejections by properly drafting mandatory share restrictions, managing specific naming conventions, and structuring corporate articles to preserve long-term tax-planning flexibility.

Which regulated professionals in Alberta are permitted to form a Professional Corporation (PC)?

In Alberta, professional incorporation is restricted to specific regulated professions under provincial legislation, including physicians, dentists, chartered professional accountants (CPAs), lawyers, veterinarians, optometrists, and chiropractors. Each profession must secure explicit approval or endorsement from their respective governing college before completing the corporate registration.

Does forming a professional corporation limit a professional's liability for malpractice?

No. Incorporating a professional corporation does not protect or shield a professional from personal liability regarding professional negligence, malpractice, or breach of professional duties. However, it can protect personal assets from ordinary commercial business liabilities, such as office lease obligations, trade supplier disputes, or general slip-and-fall claims.

Professional Corporation Incorporation in Calgary: Maximize Your Tax Efficiency

Capitalizing on the Benefits of Incorporating Your Professional Practice in Alberta

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

Professionals seeking to optimize their business operations through corporate structuring and the potential tax advantages that it can provide, need to look at the advantages available through the incorporation of one's professional practice as a Professional Corporation. A professional corporation is a legal construct, much in the way of other commercial companies, though having specific restrictions and obligations as a result of being regulated by the governing professional body, and in turn the provincial statute that has been enacted to permit the profession to structure its business operations into a professional corporation.

Currently, the province of Alberta permits the following regulated professions to incorporate as a professional corporation: medicine (incl., optometry, chiropractors, physiotherapists), dentistry, accountants and lawyers. For health related professions, particulars are set forth in the Alberta Business Corporations Act, the Alberta Health Professions Act and the Alberta regulatory body that oversees the specific health profession (i.e., the College of Physicians & Surgeons of Alberta (CPSA), the College of Dental Surgeons of Alberta (CDSA)).(1) In most circumstances, incorporating as a professional corporation should be undertaken early in one's professional career, as the substantive tax advantages cannot be retroactively applied to income earned pre-incorporation [more on importance of early incorporation].

So what are the advantages available through a professional corporation (doctors/physicians, dentists, chiropractors, optometrists, accountants, lawyers). Potential advantages include: reduced corporate tax rates, ability to claim small business deduction, preferred capital gains tax treatment on the disposition of corporate shares including use of lifetime capital gains exemption, allowing family members to hold non-voting shares so as to facilitate income splitting, and tax deferral opportunities. A professional corporation, however, does not receive the limited liability protection that is conferred to regular corporations as it relates to professional malpractice and negligence, although a professional corporation is afforded a degree of limited liability as it relates to non-professional liability.

At Neufeld Legal, we have the experience and insight to assist you in structuring your professional practice as a Professional Corporation, whether you are a doctor / physician, dentist, chiropractor, optometrist, accountant or lawyer. As such, when you are looking to incorporating a new Alberta 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.

* Contact us with respect to rates for professional corporations in the province of Alberta, given that they are not your basic incorporation, as there are additional requirements, fees and work associated therewith; nevertheless, as with any basic incorportion, our charges do not involve other matters that might be corrollary to the incorporation process or might be atypical for incorporation work, including but not limited to related legal or tax advice, engagement with other governmental bodies or professional bodies, licensing, drafting of pertinent business contracts (i.e., shareholders' agreements), negotiations, disputes, financing, coordination with other companies or other legal structuring.

(1) Certain professions (i.e., engineers, geoscientists, architects, licensed interior designers) are not required to restrict their professional activities to a professional corporation, and are permitted to utilize a regular corporation (with its increased legal protections), nevertheless, such corporations must be specifically incorporated to include distinctive legal clauses and attain approval from the profession's regulatory body [more on corporation permit to practice], which in turn requires additional legal work and cost.

Who can incorporate a Professional Corporation

Comparison of Professional Corporations vs. Standard Corporations (Alberta)

Feature / Aspect Professional Corporation (PC) Standard Business Corporation

Governing Legislation Regulated under the Alberta Business Corporations Act (ABCA) and specific professional governing acts (e.g., Health Professions Act, Legal Profession Act). Regulated under the Alberta Business Corporations Act (ABCA) or federal Canada Business Corporations Act (CBCA).

Eligible Professions Restricted to licensed members of specific regulated professions (e.g., Doctors, Dentists, Lawyers, CPA Accountants, Chiropractors, Optometrists). Open to virtually any lawful business activity, trade, or commercial venture.

Ownership & Shareholding Voting shares must be owned 100% by licensed members of the applicable professional governing body. Non-voting shares may be held by family members depending on the specific professional body's rules. Shares can be owned by any individual or legal entity (domestic or foreign) without professional qualification requirements.

Directors & Officers Directors and officers must be licensed members of the regulated profession in Alberta. Directors must be qualified individuals (18+, sound mind), but no professional license is required.

Professional Board Approval Required. Must obtain approval and a permit/certificate from the professional governing body (e.g., CPSA, LSA, CPA Alberta) prior to or upon incorporation, and renew annually. Not required. Can be incorporated directly with Service Alberta without external regulatory approval.

Corporate Name Format Must contain the words "Professional Corporation" or the abbreviation "P.C." (e.g., Dr. Jane Doe Professional Corporation). Certain professions have strict naming rules. Must end with an approved legal element such as "Inc.", "Ltd.", "Corp.", "Incorporated", "Limited", or "Corporation".

Liability Protection Protects against general corporate liabilities (e.g., commercial leases, trade debt), but does not protect the practitioner from personal liability for their own professional negligence or malpractice. Provides full limited liability protection to shareholders for corporate debts, liabilities, and negligence of the corporation (absent personal guarantees).

Taxation & Benefits Eligible for the small business deduction, income deferral, and tax-efficient dividend structuring, subject to Tax On Split Income (TOSI) rules. Eligible for the small business deduction, corporate tax rates, income deferral, and general tax planning strategies.

Note: Rules governing Professional Corporations vary by professional body in Alberta. Consult with a qualified lawyer or CPA for specific guidance.

Contact us via email at chris@neufeldlegal.com or call 403-400-4092.

Feature / Aspect	Professional Corporation (PC)	Standard Business Corporation
Governing Legislation	Regulated under the Alberta Business Corporations Act (ABCA) and specific professional governing acts (e.g., Health Professions Act, Legal Profession Act).	Regulated under the Alberta Business Corporations Act (ABCA) or federal Canada Business Corporations Act (CBCA).
Eligible Professions	Restricted to licensed members of specific regulated professions (e.g., Doctors, Dentists, Lawyers, CPA Accountants, Chiropractors, Optometrists).	Open to virtually any lawful business activity, trade, or commercial venture.
Ownership & Shareholding	Voting shares must be owned 100% by licensed members of the applicable professional governing body. Non-voting shares may be held by family members depending on the specific professional body's rules.	Shares can be owned by any individual or legal entity (domestic or foreign) without professional qualification requirements.
Directors & Officers	Directors and officers must be licensed members of the regulated profession in Alberta.	Directors must be qualified individuals (18+, sound mind), but no professional license is required.
Professional Board Approval	Required. Must obtain approval and a permit/certificate from the professional governing body (e.g., CPSA, LSA, CPA Alberta) prior to or upon incorporation, and renew annually.	Not required. Can be incorporated directly with Service Alberta without external regulatory approval.
Corporate Name Format	Must contain the words "Professional Corporation" or the abbreviation "P.C." (e.g., Dr. Jane Doe Professional Corporation). Certain professions have strict naming rules.	Must end with an approved legal element such as "Inc.", "Ltd.", "Corp.", "Incorporated", "Limited", or "Corporation".
Liability Protection	Protects against general corporate liabilities (e.g., commercial leases, trade debt), but does not protect the practitioner from personal liability for their own professional negligence or malpractice.	Provides full limited liability protection to shareholders for corporate debts, liabilities, and negligence of the corporation (absent personal guarantees).
Taxation & Benefits	Eligible for the small business deduction, income deferral, and tax-efficient dividend structuring, subject to Tax On Split Income (TOSI) rules.	Eligible for the small business deduction, corporate tax rates, income deferral, and general tax planning strategies.
Note: Rules governing Professional Corporations vary by professional body in Alberta. Consult with a qualified lawyer or CPA for specific guidance.