Professional Corporation Accountant in Canada
Tax and accounting for incorporated physicians, dentists, lawyers, engineers and other regulated professionals — across every province.
A professional corporation accountant manages the corporate and personal tax obligations of incorporated regulated professionals in Canada — including T2 corporate returns, payroll, GST/HST, and salary-versus-dividend planning. TMP Corp works with physicians, dentists, lawyers, engineers, veterinarians and other professionals whose regulatory college permits incorporation.
All figures shown are for the 2026 tax year.
Accounting built around how professional corporations actually work
Incorporating changed your tax situation more than most professionals expect. Your income no longer moves in a straight line from work performed to money in your account. It passes through a corporation with its own tax return, its own filing deadlines, and its own rules about what can leave it and when.
That structure creates real advantages. Active business income within the federal small business limit of $500,000 is taxed at a federal rate of 9% plus applicable provincial rates for the 2026 tax year, compared with top personal marginal rates of roughly 47.5% to 54.8% across the provinces.
Those advantages are conditional. They depend on filings being correct and on time, on compensation being structured deliberately, and on decisions being made before year-end rather than discovered after it.
At TMP Corp we provide accounting and tax services to professional corporations across Canada. We handle the corporate return, the personal return, payroll, GST/HST and the planning that connects them — so the structure you paid to create actually does what it was meant to do.
Regulated professionals we work with
A professional corporation is available only where your provincial regulatory college permits incorporation. Rules vary by profession and by province — who may hold voting shares, whether family members may hold non-voting shares, and how the corporation must be named.
Physicians & medical specialists
Family physicians, specialists and clinic owners, including provincial billing arrangements such as OHIP in Ontario, MSP in British Columbia and RAMQ in Quebec.
Dentists & dental surgeons
Incorporation, practice purchases and financing, and capital cost allowance on operatories and equipment.
Lawyers & legal professionals
Sole practitioners and firms, including the interaction between trust accounting obligations and corporate books.
Engineers & architects
Project-based income recognition, work in progress, and professional liability considerations for design and consulting practices.
Chiropractors & therapists
Incorporation, expense treatment, and the GST/HST position of services that may be exempt, taxable or mixed.
Psychologists & mental health
Practice structuring and the GST/HST treatment of therapeutic versus assessment and medical-legal work.
Pharmacists
Pharmacy ownership combining professional services with retail inventory, which changes both bookkeeping and tax treatment.
Veterinarians & optometrists
Clinic ownership, staffing, equipment and retained earnings management.
Other regulated professionals
Accountants, social workers and others whose provincial college permits incorporation.
A note on consultants and other incorporated businesses
Independent consultants, IT contractors and similar businesses generally incorporate as ordinary corporations rather than professional corporations, because their work is not regulated by a professional college. Much of what follows still applies — the small business deduction, salary versus dividends, T2 filing — but the incorporation process and share ownership rules are different. We work with these businesses too. Talk to us about your situation →
Don’t see your profession listed?
If your provincial college permits incorporation, we can almost certainly help. Ask us directly.
Professional corporation vs. sole proprietorship: what actually changes
| Sole proprietorship | Professional corporation | |
|---|---|---|
| Tax on business income | Personal marginal rates, up to 53%+ | 9%–12.2% on active income within the $500,000 limit |
| Income deferral | None — taxed as earned | Retained earnings deferred until withdrawn |
| Tax return | T1 only | T2 corporate and T1 personal |
| Filing deadline | June 15 (balance due April 30) | 6 months after fiscal year-end |
| Paying yourself | Draw freely | Salary, dividends or both — must be structured |
| Payroll account | Not required | Required if paying salary |
| Income splitting | Very limited | Possible, subject to TOSI |
| Liability | Personal | Limited — but not for your own professional negligence |
| Setup cost | Minimal | Incorporation + college approval fees |
| Ongoing cost | Low | Corporate filing, bookkeeping, annual records |
| Year-end flexibility | December 31 | Any date you choose |
When incorporation tends to make sense
Incorporation generally becomes worth considering when you consistently earn more than you spend personally. If you draw out everything you earn each year, the deferral advantage largely disappears and you are paying for a structure you are not using.
It is often worth revisiting when you are paying down significant professional or practice debt, buying into or purchasing a practice, planning to hold investments corporately, or approaching a practice sale where the lifetime capital gains exemption may apply.
Important
Limited liability does not protect you from claims arising out of your own professional negligence. Incorporation is a tax and structural decision, not malpractice protection.
Not sure whether incorporating is worth it for you?
We will run the numbers against your actual income and tell you straight — including when the answer is no.
Why professional corporations need specialized accounting
A professional corporation answers to two authorities at once. The CRA governs tax; your professional college governs whether the corporation may exist at all and who may own it. The two do not coordinate, and a structure that is efficient for tax can breach your college's rules.
Three areas cause most of the problems we see:
Compensation set without a plan
Salary and dividends have materially different consequences for RRSP room, CPP, corporate deductions and personal tax. Choosing a number without modelling it usually costs money in one direction or the other.
Passive income accumulating unnoticed
Investments held in the corporation generate income that can reduce the small business deduction — sometimes eliminating it entirely, based on the prior year's figures. By the time it shows up on a return, the year it affects has already closed.
Corporate records left incomplete
Dividends require directors' resolutions. Shareholdings require maintained minute books. These are administrative until a CRA review, a practice sale or a college audit — at which point they are not.
None of this is difficult to manage. It requires knowing which decisions have deadlines, and making them before those deadlines rather than after.
Our services for professional corporations
Corporate tax & filing
- Prepare and file T2 corporate tax returns
- Coordinate T1 personal returns for shareholders and family
- GST/HST registration, filing and remittance — including the exempt/taxable analysis health professionals frequently get wrong
- Compensation and income-splitting planning within TOSI rules
- Annual corporate records, minute books and shareholder resolutions
Bookkeeping & financial statements
- Monthly or quarterly bookkeeping
- Profession-specific charts of accounts for medical, dental and legal practices
- Year-end financial statements and working papers
- Expense classification and deduction support
- WSIB registration and remittance where provincially required
Payroll & HR
- Payroll processing, direct deposit and pay statements
- CRA source deductions, T4s and Records of Employment
- Vacation and statutory holiday calculations
- HR support for onboarding, agreements and terminations
- Contractor versus employee classification — including personal services business risk
Advisory & tax planning
- Incorporation setup and structure selection
- Salary and dividend modelling
- Virtual CFO and controller services — cash flow, forecasting, budgeting
- Business valuation for practice purchases and sales
- Estate planning and succession for incorporated professionals
- Capital dividend account monitoring
Want all of this handled in one place?
Corporate return, personal return, payroll and planning — coordinated by one team instead of stitched together.
Should I pay myself a salary or dividends?
There is no universally correct answer, and any accountant who gives you one without looking at your numbers is guessing.
| Salary | Dividends | |
|---|---|---|
| Creates RRSP room | Yes | No |
| CPP contributions | Required | None |
| Deductible to corporation | Yes | No — paid from after-tax income |
| Payroll account required | Yes | No |
| Source deductions | Remitted through the year | Personal tax paid at filing |
| Tax slip | T4 | T5 |
| Requires directors' resolution | No | Yes |
| Counts for mortgage income | Usually straightforward | Often requires more documentation |
Salary tends to fit
- Professionals who want RRSP contribution room
- Those who need predictable personal income for lending purposes
- Those wanting corporate income reduced below the small business limit
Dividends tend to fit
- Professionals with sufficient RRSP room already
- Those who want to avoid CPP contributions
- Those needing flexibility in timing and amount of withdrawals
Most professionals we work with use both — enough salary to generate RRSP room and support borrowing, with dividends for the remainder. The right mix changes as your income, practice stage and personal circumstances change. It is worth revisiting annually, before year-end rather than after.
Want your salary and dividend mix actually modelled?
Not a number picked at random — a calculation against your income, RRSP room and corporate position.
How does passive investment income reduce your small business deduction?
This is the rule that most surprises incorporated professionals, and it operates on a one-year delay — which is why it is usually noticed too late.
The mechanism. If your corporation earns more than $50,000 of adjusted aggregate investment income (AAII) in a year, its $500,000 small business limit is reduced the following year by $5 for every $1 of AAII above $50,000. At $150,000 of AAII, the small business limit reaches zero, and all active business income is taxed at the general corporate rate.
Worked example
Bars show remaining small business limit based on prior-year AAII.
A corporation holding roughly $1.5–2 million in investments generating a 3–4% return can cross the $50,000 threshold without any deliberate change in strategy. Nothing about the practice has to change.
What can be done about it
Options depend on your circumstances and none are universally right: adjusting the mix between interest-bearing and capital-gains-oriented investments, using corporately-owned permanent insurance, increasing personal withdrawals to invest personally, or accepting the grind where the deferral benefit still outweighs it.
The point is that this is a planning decision made in advance, not a filing outcome discovered afterward. We monitor AAII through the year so the following year's limit is a decision rather than a surprise.
Do you know what your corporation’s AAII is this year?
Most professionals do not — until it has already reduced next year’s small business limit. We will check it while it can still be changed.
Small business tax rates by province, 2026
Combined federal and provincial rates on the first $500,000 of active business income, 2026 tax year. Nova Scotia applies its provincial small business rate up to $700,000, and Saskatchewan and Prince Edward Island up to $600,000.
| Province / Territory | Provincial rate | Combined rate |
|---|---|---|
| Manitoba | 0.0% | 9.0% |
| Yukon | 0.0% | 9.0% |
| Saskatchewan | 1.0% | 10.0% |
| Prince Edward Island | 1.0% | 10.0% |
| Nova Scotia | 1.5% | 10.5% |
| British Columbia | 2.0% | 11.0% |
| Alberta | 2.0% | 11.0% |
| Northwest Territories | 2.0% | 11.0% |
| New Brunswick | 2.5% | 11.5% |
| Newfoundland and Labrador | 2.0% | 11.0% |
| Nunavut | 3.0% | 12.0% |
| Ontario | 3.2% | 12.2% |
| Quebec | 3.2% | 12.2% |
Two changes taking effect during 2026
Ontario reduces its small business rate from 3.2% to 2.2% effective July 1, 2026 — a combined rate of 11.2%. If your fiscal year straddles that date, the rate is prorated by the number of days before and after
Quebec reduces its small business rate from 3.2% to 2.2% for taxation years beginning after April 29, 2026 — also 11.2% combined.
Because Ontario’s change is prorated by days and Quebec’s depends on when your taxation year begins, two corporations in the same province can face different rates for overlapping periods. Your fiscal year-end determines which applies.
Quebec’s 5,500-hour rule — why many professional corporations pay far more
Quebec applies a condition no other province does. To access the provincial small business rate, the corporation and its associated corporations must have at least 5,500 paid employee hours in the year — roughly three full-time employees.
A professional corporation that does not meet the test is taxed at Quebec’s general rate of 11.5% on the first $500,000, producing a combined rate of approximately 20.5% rather than 12.2%.
This affects a large share of Quebec professional corporations. A physician, dentist or lawyer operating with one or two administrative staff will typically fall well short of 5,500 hours. The difference — roughly 8 percentage points on up to $500,000 — is one of the largest and least discussed planning items for incorporated professionals in Quebec.
Hours worked by the professional as an owner are subject to specific limits in this calculation. If you practise in Quebec, this deserves a direct conversation.
Practising in Quebec?
If your corporation is under 5,500 paid hours, roughly 8 percentage points on up to $500,000 is at stake. Worth a conversation.
How do you set up a professional corporation in Canada?
Confirm eligibility
Verify that your college permits incorporation and on what terms — who may hold voting shares, whether family members may hold non-voting shares, and how the corporation must be named.
Reserve a compliant name
Most provinces require your professional designation and a suffix such as "Professional Corporation."
Incorporate
Provincially, under the statute governing your profession. Articles must reflect your college's share ownership restrictions.
Obtain your certificate of authorization
Your college must approve the corporation before it may practise. This is a separate step from incorporation and is frequently missed.
Register with the CRA
Business number, corporate income tax account, plus GST/HST and payroll accounts where required.
Set up the operating framework
Corporate bank account, bookkeeping, minute book, fiscal year-end, and your compensation plan.
Maintain it
Annual returns, college renewals, corporate records and resolutions.
Timelines vary by province and college. Incorporation itself is often a matter of days; college approval commonly takes several weeks.
Thinking about incorporating?
We will confirm eligibility with your college, handle the registrations and set the structure up correctly the first time.
Why incorporated professionals work with us
Corporate and personal tax handled together
Your corporate return and your personal return are the same decision viewed from two sides. We prepare both, so compensation is planned once rather than reconciled twice.
Planning before deadlines, not filing after them
Compensation mix, passive income exposure and dividend timing all have to be decided before year-end to be worth anything. We raise them while they can still be changed.
Cross-border capability when it applies
Professionals with US income, US citizenship, US property or cross-border practice face obligations most Canadian firms refer out. Cross-border tax is a core part of our practice — see our cross-border services.
Provincial variation taken seriously
Professional corporation rules are provincial. Quebec's 5,500-hour test, differing college share ownership rules and provincial rate changes all affect the answer. We work with the rules that apply where you practise.
Direct access
You deal with the people doing the work. Questions that need a quick answer get one.
Accounting software we work with
Cloud and desktop accounting: QuickBooks Online, QuickBooks Desktop, Xero, Sage, Wave, NetSuite. If your practice uses something else, we will almost certainly work with it.
Practice and billing systems: We reconcile from medical, dental and legal billing platforms, including provincial billing and third-party payer remittances.
Reporting: Dashboards tracking retained earnings, capital dividend account balance, AAII against the $50,000 threshold, and cash flow — visible through the year, not just at year-end.
Document handling: Encrypted file exchange, electronic signatures and secure cloud storage.
Already using QuickBooks or Xero?
We work in your existing system — no migration, no rebuilding your books from scratch.
Questions incorporated professionals ask about their corporation
What are the benefits of incorporating as a professional corporation?
Incorporation allows active business income within the federal small business limit of $500,000 to be taxed at a combined rate between 9% and 12.2% in most provinces for 2026, compared with top personal marginal rates of roughly 47.5% to 54.8%. Income retained in the corporation is tax-deferred until withdrawn. It may also allow limited income splitting within TOSI rules. It adds flexibility in retirement planning. A qualifying share sale can also use the lifetime capital gains exemption. Incorporation does not protect against claims arising from your own professional negligence.
Should I pay myself a salary or dividends from my professional corporation?
Most professionals should use both: enough salary to build RRSP room and support borrowing, with dividends for the rest. The right mix depends on your income level, RRSP room and borrowing needs. Salary creates RRSP contribution room, requires CPP contributions, and is deductible to the corporation. Dividends create no RRSP room, avoid CPP, and are paid from after-tax corporate income. The right mix should be reviewed annually before year-end.
Do I still need to file a personal tax return if I am incorporated?
Yes. Your corporation files a T2 and you file a T1 personally. Salary appears on a T4 and dividends on a T5, and both must be reported on your personal return. Incorporating adds a return; it does not replace one.
Can I split income with my spouse or children?
Only within the tax on split income (TOSI) rules. TOSI taxes dividends paid to family members at the highest marginal rate unless an exclusion applies. The most common exclusions: the family member works an average of 20 hours a week in the business, or the transferring spouse is 65 or older. A third exclusion needs 25+ years of age and at least 10% of votes and value, but it does not apply to professional corporations of accountants, dentists, lawyers, physicians, veterinarians and chiropractors. For these professionals, income splitting is significantly more restricted than for other incorporated businesses.
Can I hold investments inside my professional corporation?
Yes, and many professionals do. But adjusted aggregate investment income above $50,000 in a year reduces the following year's small business limit by $5 for every $1 over the threshold, eliminating it entirely at $150,000. This should be monitored through the year rather than discovered at filing.
What expenses can my professional corporation deduct?
Your corporation can deduct expenses it incurs to earn business income. These include professional dues and college fees, malpractice and liability insurance, office rent and utilities, staff salaries, equipment and capital cost allowance, continuing education, software, professional fees, and business-use vehicle and home-office costs within CRA limits. Documentation matters as much as eligibility.
How often does my professional corporation need to file GST/HST returns?
Filing frequency depends on annual taxable supplies: generally annually up to $1.5 million, quarterly between $1.5 million and $6 million, and monthly above that. Many health professionals supply exempt services and may not need to register at all — but services such as medical-legal reports, cosmetic procedures and some assessments can be taxable. The exempt-versus-taxable analysis is one of the more common errors we see.
When is my T2 corporate tax return due?
Six months after fiscal year-end. Payment is generally due tthree months after year-end for CCPCs that claim the small business deduction and meet CRA’s prior-year income conditions, and two months otherwise — so the balance is often payable before the return is due. Corporations with tax owing above the threshold must also pay monthly or quarterly instalments.
What happens when I retire or sell my practice?
A sale may be structured as a share sale or an asset sale, with materially different tax outcomes. A qualifying share sale may access the lifetime capital gains exemption, which can shelter a substantial gain — but shares must meet asset and holding-period tests, often requiring purification well in advance. Winding up requires distributing retained earnings, using any capital dividend account balance, and final returns. Planning should begin years before a sale, not at the point of sale.
How do I set up a professional corporation?
You set one up through your regulatory college and the CRA. First, confirm your college permits incorporation. Reserve a compliant name that includes your professional designation. Incorporate provincially under the statute for your profession, with articles that reflect its share ownership rules. Obtain your certificate of authorization from the college. Then register with the CRA for a business number and any GST/HST and payroll accounts. Incorporation often takes days; college approval commonly takes weeks.
What is a capital dividend account?
A notional account tracking tax-free amounts within your corporation — principally the non-taxable half of capital gains and certain life insurance proceeds. Balances can be paid to shareholders as tax-free capital dividends, with an election filed by the time the dividend becomes payable or is paid, whichever is earlier. The balance moves with corporate capital gains and losses, so it should be verified before declaring a capital dividend rather than assumed.
Can I use my professional corporation for retirement savings?
Yes. Retained earnings can be invested corporately, providing a larger initial capital base because corporate tax was lower than personal tax. This must be weighed against the passive income rules, which can reduce your small business deduction, and coordinated with RRSP room, TFSA capacity and any individual pension plan.
What if I practise in more than one province?
Corporate taxable income is allocated among provinces based on permanent establishments, using payroll and gross revenue. Practising in a second province may create a permanent establishment there, requiring allocation and potentially extra-provincial registration and a second college registration. Rates differ by province, so allocation affects your total tax.
Do I need a payroll account for my professional corporation?
Yes, if the corporation pays salary or wages to anyone including you as a shareholder-employee. You must open a CRA payroll program account, remit source deductions on schedule, and issue T4s by the end of February. If you take only dividends, no payroll account is required — but you also generate no RRSP room.
Is incorporating still worth it for a physician or dentist in Canada?
For most professionals earning more than they spend personally, yes — the deferral advantage remains meaningful. It is weaker if you withdraw everything you earn each year, if you practise through a partnership sharing a single small business limit, or if you are in Quebec and cannot meet the 5,500-hour test. It is a calculation, not a rule of thumb, and it is worth redoing when your income or practice structure changes materially.
Still have a question we have not answered?
Ask it directly. The first conversation is free and there is no obligation.
Book your professional corporation review
Tell us about your corporation and we will review your situation and tell you what we would change. No cost, no obligation.
- A look at your current corporate and personal tax structure
- Whether your salary and dividend mix is actually working for you
- Any passive income or provincial issues affecting your small business limit
- A clear answer on what we would change, and what it would cost
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This page provides general information about the taxation of Canadian professional corporations and does not constitute tax, accounting or legal advice. Tax rates, thresholds and rules referenced are current for the 2026 taxation year and may change. Provincial rules — including which professions may incorporate, share ownership restrictions and provincial tax rates — vary. Professional corporation requirements are set by your provincial regulatory college. Please consult a qualified professional regarding your specific circumstances.
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