Incorporating A Social Work Professional Corporation or Social Service Professional Corporation in Ontario

April 12, 2023 | By Matthew Ordower

Back to Blog

Matthew Ordower

Social Workers and Social Service Workers in Ontario that wish to practice their profession through a corporation may only do so through an Ontario professional corporation.  A Social Work Professional Corporation or Social Service Work Professional Corporation is simply a corporation that is subject to the conditions set out in the Ontario Business Corporations Act (the “OBCA”) and the rules and regulations mandated by the Ontario College of Social Workers and Social Service Workers (“OCSWSSW”).

In addition to the rules and regulations which are summarized below, a major difference between professional and non-professional corporations is liability protection. A social worker or social service worker will not be able to limit or shield their personal liability with respect to professional obligations if they operate through a Social Work Professional Corporation or Social Service Work Professional Corporation. If there is a claim against the social worker or social service worker for professional misconduct, for example, the Social Worker and the Social Work Professional Corporation or the Social Service Worker and Social Service Work Professional Corporation would be jointly and severally liable to satisfy all professional liability claims and would rely on their professional liability insurance to satisfy such claims.

Restrictions/Regulations

A Social Work Professional Corporation is subject to the following restrictions/regulations:

  • Jurisdiction. Social Workers and Social Service Workers are not permitted to use a federal corporation for their professional corporation. For Social Workers and Social Service Workers licensed in Ontario, a professional corporation must be an Ontario corporation.
  • Name of Social Work Professional Corporation. Social Work Professional Corporations and Social Service Work Professional Corporations are subject to strict naming conventions. The name of the corporation:  
  • may include the licensee’s given names or initials;
    • must include the licensee’s surname as it appears on file with OCSWSSW; and
    • must include the ending “Social Work Professional Corporation” or “Social Service Work Professional Corporation”, as applicable.

Social Workers and Social Service Workers wishing to advertise to the public under a different practice/clinic name, will have to file a separate business name registration and disclose this practice name to OCSWSSW.

  • Articles of Incorporation. The Articles of Incorporation of the Social Work Professional Corporation and Social Service Work Professional Corporation must include certain restrictions:
  • Business Restriction. The Corporation may not carry on a business other than the practice of social work or social service work, as applicable, or activities which are ancillary to such practice, including the investment of surplus funds earned by the Professional Corporation.
  • Restrictions on the Transfer/Ownership of shares. Each share of the Social Work Professional Corporation must be owned by a member of the OCSWSSW.
  • Directors and Officers.
  • Only social workers who are also shareholders of the Social Work Professional Corporation can be directors and officers of the Social Work Professional Corporation.
  • Only social service workers who are also shareholders of the Social Service Work Professional Corporation can be directors or officers of the Social Service Work Professional Corporation
  • Obtaining a Certificate of Authorization. Once incorporated a Social Worker or Social Service Worker must apply to OCSWSSW for a Certificate of Authorization. Social Workers and Social Service Workers are not permitted to practice their profession through a corporation until this certificate has been issued. The Certificate of Authorization application may be rejected if the corporation is not compliant with all the restrictions/regulations set out above.

The application for a Certificate of Authorization is required to be submitted in accordance with the instructions of the OCSWSSW.

As part of the application, the Social Worker or Social Service Worker will need to:

  • Complete the application form including a statutory declaration.
    • Upload a copy of the Certificate and Articles of Incorporation for the Professional Corporation.
    • Upload a recent Certificate of Status. This report must be ordered from the Ontario Ministry.
    • Pay the applicable fee to OCSWSSW. 
  • Renewing your Certificate of Authorization. Certificates of Authorization for Social Work Professional Corporations and Social Service Work Professional Corporations must be renewed annually. As part of the renewal process the Social Worker or Social Service Worker will need to do the following:
    • Complete the renewal application
    • Upload a current Certificate of Status
    • Pay the Renewal Fee

Why Incorporate a professional corporation? / What are the advantages of a Professional Corporation? / Should I Incorporate a Professional Corporation?

For professionals, some of the main reasons to incorporate are:

  • Tax Benefits. The main reason a Social Worker or Social Service Worker will want to incorporate is for tax savings. By incorporating a Social Work Professional Corporation or Social Service Work Professional Corporation, the professional will be able to take advantage of the small-business deduction that is available on active business income for Canadian Controlled Private Corporations. By forming a Social Work Professional Corporation or Social Service Work Professional Corporation, social workers and social service workers will also have the ability to leave behind a portion of their business income in the Professional Corporation and ultimately defer the payment of personal taxes on this income until the professional decides to pay themselves.
  • Liability Protection. Although Social Workers and Social Service Workers cannot limit personal responsibility with respect to professional obligations, the Social Work Professional Corporation and Social Service Work Professional Corporation does provide liability protection for non-professional obligations that are entered into by the professional corporation. For example if the Social Work Professional Corporation is the tenant on a lease and no personal guarantee/indemnity is provided, the landlord would only be able to claim against the Social Work Professional Corporation in the event of a default by the Professional Corporation under the lease.
  • Saleability. If you are looking to exit your business at some point, you’ll have more options when selling a corporation. You can sell the assets of the company or the shares. Buyers usually want to buy assets (as they get to depreciate them again at higher values) and sellers typically want to sell shares (as the lifetime capital gains exemption may be available). It’s not really possible to sell a sole proprietorship itself, although you can sell the assets you used (equipment, for example). Buyers examine factors such as profitability, net worth and market position when looking at your corporation. Keep in mind, anyone purchasing the shares of your corporation will have to be a Social Workers or Social Service Workers, as applicable!
  • Growth. A Professional Corporation is capable of having many shareholders so long as they meet the requirements of the OCSWSSW. This allows others to get involved, take an ownership interest and become invested in the future success of the business. It’s just a better way to combine resources and share the spoils. With a sole proprietorship, it’s just you. If you want your business to grow, it helps to have multiple perspectives and ideas and different people with a vested interest.

Do I need a Section 85 Rollover – Transitioning from a Sole Proprietorship to a Professional Corporation (Rollovers)

Generally speaking when you transfer assets from a sole proprietorship to a corporation you will trigger a tax event for the sole proprietor who would be deemed to have disposed of the assets of the sole proprietorship at its fair market value. The Section 85 rollover allows the transfer of the assets from a sole proprietorship to a corporation on a tax deferred basis. Accountants will often recommend that professionals complete the transfer and file the joint election form in connection with their goodwill and other assets. Whether or not you require a rollover is a question for your accountant.

At Ordower Law, we can assist with your incorporation needs. Feel free to give us a call at 416.849.1900. You can also book a call with us here.  If you would like us to assist with incorporating your professional corporation  please let us know- we are happy to assist.

For more general information on incorporating in Ontario or starting a business in Ontario, please view our guide here: Incorporate in Ontario and Canada- Everything You Need to Know.