Eligibility is the easy part
The Law Society Act opens the professional corporation to paralegal licensees on the same terms as lawyers: an Ontario corporation whose articles are limited to providing legal services, a name ending in "Professional Corporation", and a Certificate of Authorization from the LSO that renews every year. Shares, directorships and officer roles are restricted to licensees, which rules out a spouse, a family trust or a holding company from day one. And nothing about the structure lightens the regulatory load: By-Law 9 trust obligations, the mandatory professional liability policy and your personal responsibility for professional negligence all continue exactly as before, because the Law Society disciplines the licensee, never the company.
So the question is not whether you may incorporate. It is whether this practice, at this income, gets anything back for the cost.
The deferral test, run at paralegal incomes
The whole tax case rests on one mechanism. An Ontario corporation pays about 12.2% on its first $500,000 of active practice profit, while you pay your personal marginal rate; the saving equals the gap between those two rates, applied only to dollars the corporation keeps after paying you. At the top personal bracket the gap is famously wide. At the income a busy Landlord and Tenant Board and Small Claims practice actually nets, the gap is real but thinner, and it has to clear the structure's running costs before you are ahead at all.
Those costs are concrete: the incorporation work itself, an annual Certificate of Authorization renewal, an Ontario corporate annual return, a T2 return every year, and a payroll account because your own pay now moves through source deductions. A practice retaining a few thousand dollars a year can spend the entire deferral benefit on administration. A practice retaining tens of thousands, year after year, usually comes out clearly ahead, and picks up a chosen fiscal year-end and salary-dividend flexibility on top.
Per-diem and agency work changes the answer
Many licensees earn much of their income as agents for one law firm, or running defence files for a single insurer. Put that relationship inside a corporation and the CRA may see a personal services business: a company earning income from work you would be doing as that payer's employee if the corporation did not exist. A PSB loses the small business deduction, pays an additional federal tax on top of full corporate rates, and is denied most deductions beyond the salary it pays you. The corporation formed to save tax then costs you tax.
What decides it are the working facts: who controls the files and the hours, whose office and systems you work in, how many clients the practice genuinely has. If one payer dominates your revenue, we deal with that picture, or the contract terms behind it, before any articles are filed.
The honest screen
| Your situation | Our honest answer |
|---|---|
| The practice nets what your household spends | Stay a sole proprietor; you would be buying a T2 and a renewal fee, not a saving |
| Profit is reliably left over each year | Retention at 12.2% starts to outrun the carrying costs; incorporate deliberately |
| One firm or insurer pays most of your fees | Resolve the PSB exposure first; incorporating can raise your tax bill |
| Income swings hard between years | A corporate year-end and salary timing can smooth what a calendar-year T2125 cannot |
| You hope to sell the practice one day | The $1.25M lifetime capital gains exemption needs a share buyer, rare for a solo licence |
If the math clears, the sequence is short
A paralegal practice is usually light on assets, which keeps the conversion clean: incorporate at a natural break in the year, roll equipment or unbilled work in under a section 85 election where the values warrant it, open the corporation's HST account, move the general and mixed trust accounts into the corporate name with the bank, and start your salary. From there the annual rhythm is the T2, the LSO renewal and the payroll filings, which we run through Corporate Tax Filing so nothing is missed between hearing blocks.
Our Incorporation engagement does the decision math first, in writing, before any drafting, then handles the structure, the elections and the first-year filings, handing off to Tax Planning & Advisory for the salary-dividend design. We run this screen for licensees across Mississauga and the GTA regularly; when the numbers say wait, we say wait, and the free 15-minute discovery call costs you nothing either way.
Source: CRA — Corporation tax rates.
