Professional corporation setup
A professional corporation allows eligible regulated professionals (such as doctors, dentists, lawyers, accountants, and other provincially regulated professions) to carry on their practice through a corporation rather than personally. This can provide flexibility in how income is withdrawn, opportunities for tax deferral on retained profits, and better planning for retirement and succession.
- Guidance on whether a provincial or federal incorporation best fits your practice location, brand, and growth plans.
- Coordination with your professional regulatory body to ensure name approval, ownership rules, and practice restrictions are fully respected.
- End‑to‑end setup support: articles of incorporation, minute book, corporate records, CRA account registrations, and initial tax and HST/GST elections.
- Alignment of your corporation’s year‑end, banking, and bookkeeping systems so your filings and cash flow are easy to manage from day one.
Share structure and dividends
The way your shares are structured determines how income, control, and future growth are shared between you, your family, and any holding companies or trusts. A well‑designed share structure can enable income splitting (where permitted), access to the Lifetime Capital Gains Exemption on a future sale, and flexible dividend planning over time.
- Design of voting and non‑voting shares to separate control from participation in income, where appropriate.
- Use of different share classes to allow tailored dividend payments to you, your spouse, adult children, or a family holding company, within current tax and attribution rules.
- Planning for an eventual sale or succession of the practice, including strategies such as estate freezes to shift future growth to the next generation or a family trust.
- Documentation of all share issuances, redemptions, and reorganizations so your corporate records remain compliant and due diligence-ready.
Salary vs dividend optimization
As the owner‑manager of a professional corporation, you can typically pay yourself by salary, dividends, or a combination of both. The optimal mix changes over time and depends on factors like your cash needs, marginal tax rates, RRSP strategy, CPP entitlement, and other household income.
- Annual analysis of salary versus dividend scenarios, comparing combined corporate and personal taxes to keep overall tax as low and predictable as possible.
- Planning salaries to create RRSP contribution room and CPP credits when those long‑term retirement benefits outweigh the additional payroll costs.
- Using dividends where they fit better for simplicity, lower personal tax rates on investment income, or to extract surplus profits without setting up payroll.
- Designing a draw strategy that smooths your personal income from year to year, reduces surprise tax bills, and matches your lifestyle and debt‑repayment goals.
Holding companies and family trusts
Holding companies and family trusts can add another layer of protection and planning to your professional structure. They are often used to move after‑tax practice profits into a lower‑risk environment, support long‑term investing, and share growth with family members in a controlled way.
- Creation of a holding company to receive tax‑free inter‑corporate dividends from your professional corporation and hold investments separately from practice risk.
- Design of a discretionary family trust that can own shares of your corporation or holding company to enable income splitting and future multiplication of the Lifetime Capital Gains Exemption, where available.
- Structuring flows between your professional corporation, holding company, and trust so cash, investments, and future sale proceeds are directed to the right family members at the right time.
- Ongoing compliance support for trust and holding‑company filings so your advanced structure remains efficient and fully aligned with evolving tax rules.
Capital Dividend Account (CDA) tracking
The Capital Dividend Account is a notional tax account that tracks certain tax‑free amounts inside a private corporation, such as the non‑taxable portion of capital gains and life insurance proceeds received on the death of an insured person. Properly managed, the CDA allows your corporation to pay out tax‑free capital dividends to Canadian‑resident shareholders, creating valuable planning opportunities for you and your family.
- Tracking CDA movements arising from capital gains, capital losses, eligible life‑insurance proceeds, and other qualifying amounts so your balance is always current.
- Preparing and filing the required elections (such as Form T2054) to designate capital dividends correctly and avoid costly Part III tax on excessive elections.
- Coordinating CDA withdrawals with your broader compensation strategy to blend tax‑free capital dividends with regular dividends and salary in the most efficient way.
- Providing clear documentation and support so you understand your CDA balance before major transactions like portfolio rebalancing, corporate reorganizations, or estate plans.
These professional corporation services work together to help regulated professionals build a secure, tax‑efficient structure that supports both current lifestyle and long‑term wealth planning.
Ready to structure your professional corporation?
Take the next step toward a more tax‑efficient, better‑protected professional practice. Whether you are setting up a new professional corporation, optimizing salary and dividends, or adding a holding company and family trust, tailored planning can help you keep more of what you earn and build lasting wealth for your family.
Contact our team today to schedule a consultation and review your current structure, compensation strategy, and Capital Dividend Account opportunities so your corporation is working as hard for you as you work for your clients.
