Welcome to the Falcon Law PC blog, where we delve into various legal topics that impact professionals in Ontario. Today, we’re exploring the concept of LSO Professional Corporations for lawyers. If you’re a lawyer considering structuring your practice as a professional corporation, this guide is for you.
What is a Professional Corporation?
A professional corporation (PC) is a corporate entity through which regulated professionals can offer their services. Unlike traditional corporations, a PC is tailored for professions that have specific governing bodies and regulations, such as lawyers.
The Role of the Law Society of Ontario (LSO)
The Law Society of Ontario (LSO) is responsible for the regulation of lawyers and paralegals in Ontario. When it comes to professional corporations, the LSO sets the standards and regulations for lawyers wishing to incorporate.
Benefits of an LSO Professional Corporation
- Tax Planning: PCs often offer tax advantages, such as reduced corporate tax rates and income splitting.
- Limited Liability: While professional negligence remains a personal liability, other liabilities, like lease agreements or business loans, can be limited under a PC.
- Estate Planning: PCs allow for easier transfer and sharing of assets, benefiting family and succession planning.
- Professional Image: Incorporating can enhance the image and perception of a law practice.
Considerations Before Incorporating
- Regulatory Requirements: Lawyers must meet the specific requirements outlined by the LSO. This includes ensuring that the corporation’s sole function is the practice of law.
- Costs: There are costs associated with setting up and maintaining a PC, including annual fees and potential increased accounting fees.
- Insurance: Professional liability insurance is still a necessity for lawyers operating under a PC.
Steps to Establish an LSO Professional Corporation
- Name Approval: The corporation’s name must comply with the LSO’s naming conventions and receive approval.
- Incorporation: Once the name is approved, you can incorporate under the Business Corporations Act.
- LSO Application: Submit an application to the LSO for a Certificate of Authorization.
- Annual Renewals: Ensure that you renew your Certificate of Authorization annually with the LSO.
While there are distinct advantages to forming a professional corporation for lawyers in Ontario, it’s crucial to be aware of the associated responsibilities and regulations. Always consult with a professional advisor or legal counsel to determine if this is the right structure for your law practice.
Thank you for joining us at Falcon Law PC’s blog. We’re committed to providing valuable insights for lawyers and the general public on key legal topics. If you have any questions or need assistance with your professional corporation, don’t hesitate to reach out.