How to buy an accounting practice in Ontario: licences, ownership rules and what transfers

Public accounting in Ontario is a licensed activity, and the licensing body is CPA Ontario, the Chartered Professional Accountants of Ontario. The Public Accounting Act, 2004 says that unless an individual is licensed under that Act, they shall not practise as a public accountant, and that a corporation shall not do so unless it holds a valid certificate of authorization. Section 3 sets out exceptions, including bookkeeping and preparing financial statements solely as part of tax returns where no independent opinion or other licensed service is offered. A buyer cannot simply step into a seller’s seat: section 15 bars using a licence issued to another person. This guide covers Ontario’s rules only.

Who regulates public accounting in Ontario

CPA Ontario is the body that licenses members as public accountants. Under the Chartered Professional Accountants of Ontario Act, 2017, one of its objects is licensing members as public accountants and regulating those members and professional corporations under the Public Accounting Act, 2004. The Public Accounting Act, 2004 also provides that a person must be a member of CPA Ontario to be eligible for a licence, and that a licence is revoked on the day the person ceases to be a member. For a buyer, membership comes first and the licence follows from it.

The individual licence and what it covers

Section 13 of the Public Accounting Act, 2004 does more than prohibit practising without a licence. It also bars an unlicensed individual from using the name or title “Public Accountant”, from using the designation “Licensed Public Accountant” or the initials “LPA”, and from otherwise holding themself out as licensed. If you plan to keep the seller’s letterhead, engagement letters or website wording, check that none of it implies a licence you do not hold. Section 6 lets CPA Ontario license a person permitted to practise as a public accountant in another jurisdiction, subject to that section’s conditions, so a buyer licensed elsewhere should ask CPA Ontario how that route applies to them.

The corporation needs its own certificate of authorization

Under section 13(2) of the Public Accounting Act, 2004, a corporation shall not practise as a public accountant unless it holds a valid certificate of authorization. Section 11 lets licensees establish a professional corporation to practise public accounting, and the Chartered Professional Accountants of Ontario Act, 2017 separately lets members of CPA Ontario establish a professional corporation, subject to the by-laws. If you intend to practise public accounting through your own corporation, section 13(2) means it must hold its own certificate of authorization. If the practice is run through the seller’s corporation, ask CPA Ontario what happens to that certificate when ownership changes. The sources read for this page do not say.

Who may own the professional corporation

Who may own the corporation is set by Ontario’s Business Corporations Act. Section 3.2 requires all of a professional corporation’s issued shares to be legally and beneficially owned, directly or indirectly, by one or more members of the same profession, and requires its officers and directors to be shareholders. An agreement or proxy giving a non-shareholder the vote on its shares is void. A buyer who is not a member of the profession therefore cannot hold the shares of a professional corporation. The Chartered Professional Accountants of Ontario Act, 2017 requires a professional corporation to notify the registrar of a change in its shareholders within the time and in the manner specified by the by-laws. Read those by-laws, and confirm with CPA Ontario whether the certificate carries over. BDC’s due-diligence guide for buyers lists licences and permits, and the laws and regulations affecting the company, among the items to review, and says to make sure key contracts, such as regulatory agreements, can be assigned to you if necessary.

Why licensing status at closing affects who can bill

Section 37 of the Public Accounting Act, 2004 says no person is entitled to recover costs or charges made as a public accountant unless they were licensed under the Act when the services were rendered. For a corporation, the equivalent rule requires that it was a professional corporation holding a valid certificate of authorization at that time. Ask a lawyer how this applies to work in progress at closing, including whether it will be billed by the seller or by you, and whether everyone performing public accounting work after closing will hold the licence or certificate section 37 refers to.

For the national picture, including how to judge the practice itself, see buying an accounting practice in Canada. For Ontario’s wider licensing questions on any sale, see licences and permits in an Ontario business sale. Practices on the market are listed under accounting practices for sale.

What to ask the seller for

• The seller’s current CPA Ontario licence, and the certificate of authorization held by any professional corporation that carries on the practice.
• The professional corporation’s share register, including any recent changes in shareholders and the notices given to the registrar.
• Any correspondence with CPA Ontario about the practice, including inspections, conditions on the licence or open complaints.
• A list of engagements by type, so you can see which work depends on a licence and who currently signs it.
• Engagement letters and the wording used on letterhead and the website, to check the titles in use.