When medical practice is incorporated, a separate legal entity is created to own and operate the practice. The physician then becomes a shareholder, director, or employee of that corporation. Many physicians choose to establish professional corporations (PCs) for their practices to gain certain financial and legal advantages.
Physicians in Ontario who wish to practice medicine through a corporation may do so only by establishing an Ontario professional corporation. A Medicine Professional Corporation is a corporation governed by the Ontario Business Corporations Act (OBCA) and the regulations set by the College of Physicians and Surgeons of Ontario (CPSO).
In addition to these rules and regulations, one key distinction between professional and non-professional corporations is liability protection.
What is a Medicine Professional Corporation?
A Medicine Professional Corporation (MPC) is a legal entity incorporated under Ontario Business corporation law. It allow physicians to operate their medicine practice as a corporation instead of as a sole proprietor or partnership. Medicine Professional Corporation are governed by the Ontario Business Corporations Act, the Regulated Health Professions Act (RHPA), and relevant guidelines of regulatory colleges such as the College of Physicians and Surgeons of Ontario (CPSO).
Key features include:
- Only licensed Ontario physicians can incorporate a Medicine Professional Corporation and hold voting shares.
- The corporation’s business is limited to the practice of medicine and ancillary activities.
- Directors and officers must be physician shareholders.
Certificate of Authorization: Your Corporation’s License to Practice
Registering your Medicine Professional Corporation with the Ontario Business Registry is only half the battle. Before you can see a single patient or bill OHIP, your Medicine Professional Corporation must obtain a Certificate of Authorization from the CPSO.
This certificate is proof that your corporation meets all the professional standards requirements to practice. You must renew this certificate annually alongside your personal license to practice.
Requirements for a Certificate of Authorization include:
- The corporation is duly incorporated under the OBCA.
- All shareholders, directors, and officers are fit to hold their positions.
- The corporation carries adequate liability insurance.
- The name of the corporation complies with CPSO regulations.
Steps to obtain Certificate of Authorization for a Medicine Professional Corporation
No Medicine Professional Corporation can practice medicine without a Certificate of Authorization from the CPSO—it’s your “license to incorporate” for healthcare delivery. This certificate confirms your corporation meets RHPA standards.
Step-by-Step Process:
- Incorporate First: File Articles of Incorporation for your Medicine Professional Corporation. Ensure your proposed Medicine Professional Corporation name complies with CPSO rules (more on this below).
- Apply to CPSO: Log into your secure CPSO Member Portal at my.cpso.on.ca. Navigate to the “Profile” section, then the “Corporations” tab, and submit the online application.
- Pay the Fee: A non-refundable $400 fee is due during submission (credit card only).
- Review and Approval: CPSO verifies eligibility—you must be a registered member. Approval typically takes 2–3 weeks, and the certificate is effective from the issuance date.
- Post-Approval Steps: Register for a Business Number (BN) with the Canada Revenue Agency (CRA) for HST and payroll. Update your billing with Ontario Health.
Pro Tip: RegiCorp Inc. handle the Ministry filing for you, ensuring seamless integration with your CPSO application. Practicing without this certificate is a professional offence, don’t skip it!
Changes in the Medicine Professional Corporation
Your professional corporation is not static. Any fundamental change must be reported to both the Ontario Business Registry and the CPSO to maintain your Certificate of Authorization.
These changes include:
- Adding or removing a shareholder.
- Changing the corporate name or address.
- Appointing or resigning a director or officer.
- Amending the articles of incorporation.
Failure to report these changes promptly can result in the suspension of your Certificate of Authorization, meaning your corporation can no longer practice medicine or bill OHIP.
How to Incorporate a Medicine Professional Corporation from Outside Ontario
The rules for professional corporations are provincial. A corporation incorporated in another Canadian province (e.g., Alberta or British Columbia) or a foreign jurisdiction cannot practice medicine in Ontario.
To practice in Ontario, you must incorporate under the Ontario Business Corporations Act and obtain a Certificate of Authorization from the CPSO. If you are moving to Ontario from another province, you would need to dissolve your existing out-of-province corporation and incorporate a new one in Ontario. For This process you need to obtain “Certificate of Continuance” from Ontario Business Registry
Naming Rules of Ontario Medicine Professional Corporation
You cannot choose a name that is your mind. Or You also can not use an Ontario numbered Name Corporation for your Medicine Professional Corporation. That’s why choosing the right name is crucial. Ontario’s rules for Medicine Professional Corporation names are strict to maintain professionalism and avoid public confusion.
Naming Guidelines:
- Mandatory Elements: The name must include your surname as it appears in the CPSO register (e.g., “Dr. Jane Smith Medicine Professional Corporation”). You can add given names, initials, or descriptors like “Family” or “Surgical.”
- Prohibited Terms: No words implying government affiliation (e.g., “Royal” or “Crown”) or misleading scopes (e.g., “Hospital”).
- Uniqueness Check: Search the Ontario Business Registry and CPSO database for availability.
- Format: End with “Medicine Professional Corporation,” French equivalents are also allowed for bilingual practices.
File your NUANS Business name search report with the Articles of Incorporation. If rejected, amendments cost extra—get it right the first time with professional help.
Managing Changes in Your Medicine Professional Corporation
Your Medicine Professional Corporation isn’t set in stone; life changes like adding partners or relocating require prompt updates to stay compliant.
Common Changes and How to Handle Them:
- Shareholder Updates: Notify CPSO within 15 days of any member shareholder changes via the Member Portal. Include names and effective dates.
- Address Changes: Submit practice or registered office updates through the Portal’s message center. Practice addresses become public in the CPSO’s Find a Doctor tool.
- Name or Incorporation Number Edits: Update directly in the “Corporations” tab—no formal amendments needed.
- Amalgamations or Dissolutions: Report via the Portal; amalgamations may revoke your certificate, requiring a new application.
- Replacement Certificates: Request online duplicates for a fee if lost.
Holding companies can’t own shares, but trusts for minor children are permitted for non-voting shares. Annual renewals ($175 fee) keep everything current—miss one, and your certificate lapses.
Benefits and Drawbacks of a Medicine Professional Corporation
Weighing the pros and cons helps determine if incorporation aligns with your financial strategy. Here’s a balanced overview:
Key Benefits:
- Tax Deferral and Savings: Retain earnings in the corporation at lower rates (11.5% small business deduction), deferring personal taxes until withdrawal. This can save thousands annually for high earners.
- Limited Liability: Protects personal assets from business debts (e.g., malpractice is still personal, but office loans aren’t).
- Income Splitting (Limited): Share dividends with eligible family members, subject to TOSI rules.
- Succession and Credibility: Easier to sell or transfer the practice; enhances appeal to banks for loans.
Potential Drawbacks:
- Setup and Compliance Costs: $1,500–$3,000 initial fees, plus ongoing accounting ($2,000+/year) and CPSO renewals.
- Restrictions: Strict shareholder rules limit flexibility; passive income over $50,000 triggers higher taxes.
- Complexity: More paperwork for CRA filings and audits—ideal for established practices, not startups.
- Retirement Implications: Dissolving later can trigger taxes; plan ahead.
Overall, benefits shine for practices billing over $200,000, but consult a CPA for personalized math.
FAQ for Medicine Professional Corporation
What is the difference between incorporating and getting a Certificate of Authorization?
This distinction is:
Incorporation: This is the process of creating the legal business entity (the corporation) with the Government of Ontario under the Business Corporations Act. We handle this for you. It gives your corporation its legal existence.
- Certificate of Authorization: This is a license from the College of Physicians and Surgeons of Ontario (CPSO) that permits your corporation to practice medicine. You cannot bill OHIP or see patients under the corporation without it.
Think of it this way: Incorporation is getting your car’s ownership; the Certificate of Authorization is getting your driver’s license. You both need to drive legally.
Can I use a numbered name company for my medical practice?
No. The CPSO’s naming regulations explicitly prohibit using a numbered company (e.g., 12345678 Ontario Inc.) for the practice of medicine. The corporation’s name must clearly identify the healthcare professional and comply with the strict style guidelines, including the use of “Medicine Professional Corporation”
What are the annual maintenance requirements for my Medicine Professional Corporation?
To keep your corporation in good standing and your Certificate of Authorization valid, you must:
- File an Annual Return with the Ontario Business Registry
- Renew Your Certificate of Authorization annually with the CPSO when you renew your personal license.
- Maintain a Corporate Minute Book with updated records of shareholders, directors, and major decisions.
- File a Separate Corporate Tax Return (T2) each year.
Can my Medicine Professional Corporation own real estate?
Yes, a common and strategic use of a professional corporation is to own the commercial property where your practice is located. The corporation can then pay rent to itself, creating a legitimate business expense for the medical practice side while building equity in the real estate side. This requires careful tax and legal planning.
I’m moving to Ontario from another province. Can I use my existing corporation?
No. You must incorporate a new corporation under the Ontario Business Corporations Act and obtain a Certificate of Authorization from the CPSO. A corporation from another province is not permitted to practice medicine in Ontario.
Do I need to incorporate before applying for a CPSO Certificate of Authorization?
Yes. You must first file Articles of Incorporation with the Ontario Business Registry or an authorized intermediary like RegiCorp Inc. Only then can you apply for the Certificate of Authorization through the CPSO Member Portal.
Can I use “Clinic,” “Health Centre,” or “Medical Group” in my Medicine Professional Corporation name?
No. CPSO prohibits terms that imply institutional status or mislead the public. Acceptable examples:
- Dr. Sarah Chen Medicine Professional Corporation
- Chen & Patel Medicine Professional Corporation
- Toronto Family Medicine Professional Corporation.
Is there any Business Restrictions for Medicine Professional Corporation?
A Medicine Professional Corporation is restricted to conducting only the practice of medicine and activities that are ancillary or incidental to that practice. This can include actions such as investing in surplus funds earned by the corporation. It may not engage in any business that is unrelated to the practice of medicine.
Can I use a federal corporation for my medical practice in Ontario?
No. Ontario physicians must incorporate provincially, not federally. Corporations from other provinces or federally incorporated entities must be “continued” in Ontario before becoming an Medicine Professional Corporation.