Law Professional Corporation in Ontario
What Ontario lawyers need to know before incorporating their practice through a law professional corporation.
A law professional corporation lets an Ontario lawyer practise through a corporation once the Law Society of Ontario (LSO) issues a certificate of authorization. All shares must be owned by licensed lawyers, and officers and directors must be shareholders. It offers tax planning benefits but does not shield you from personal liability for your own professional negligence.
Regulated by: Law Society of Ontario (LSO)
Certificate of authorization is required
Once incorporated, a lawyer must apply to the LSO for a certificate of authorization and cannot practise law through the corporation until it is issued. The certificate must be kept in good standing with the Law Society for the corporation to keep operating.
Who can own shares
All issued shares must be legally and beneficially owned, directly or indirectly, by one or more licensed lawyers, and all officers and directors must be shareholders. Unlike medicine and dentistry, family members generally cannot hold shares. A holding company may be a shareholder only if its own owners, directors and officers are restricted to eligible licensees and it does nothing but hold the shares.
Naming the corporation
The corporate name must include the words "Professional Corporation" (or "Société professionnelle"), include the lawyer's surname as recorded with the LSO, and indicate the profession. A numbered name is not permitted for a law professional corporation.
What it does not protect
A law professional corporation does not limit your liability for your own professional negligence or misconduct. You remain personally responsible to your clients and to the Law Society, and your professional liability insurance (LawPRO) still applies. Incorporating changes the tax structure, not your professional accountability.
Tax and income planning
Income kept in the corporation is generally taxed at the lower small business rate rather than your personal rate, allowing tax deferral and steadier income planning. The advantage depends on your earnings and how much you retain in the company, so model it with an accountant before incorporating.
Setup costs and steps
Setup involves a NUANS name search, incorporation under Ontario's Business Corporations Act (government filing fee about $300), issuing shares to eligible lawyers, and then obtaining the LSO certificate of authorization. Markham Office can prepare the incorporation and the LSO application.
Frequently asked questions
- Do I need LSO approval before practising through my corporation?
- Yes. You must hold a valid LSO certificate of authorization before you practise law through the corporation.
- Can my spouse own shares in my law corporation?
- Generally no. Shares in a law professional corporation must be owned by licensed lawyers, unlike medicine or dentistry which allow family non-voting shares.
- Does incorporating limit my liability to clients?
- No. You remain personally liable for your own professional negligence, and your professional liability insurance still applies.
- Is a law professional corporation worth it?
- It depends on your income and how much you can leave in the corporation for tax deferral. An accountant can model whether it pays off for you.
Ready to launch your business?
Talk to our team and take the first step today — no obligation.