Incorporating a Federal Incorporation in Canada is a significant step for entrepreneurs aiming to carve out their niche in the market. It’s a decision that comes with numerous benefits, such as limited liability, improved credibility, and potential tax advantages. However, navigating the incorporation process can be complex. This comprehensive guide will walk you through how to successfully incorporate your business in Canada.
What is Federal Incorporation?
An incorporation, also called incorporation, corporation, company, limited company, limited liability Company and Certificate of Incorporation, is a unique legal entity that is distinct from the people who own its shares.
A corporation can borrow money, pay taxes, hire employees, commence or be subject to a lawsuit, and own property. The shareholders may participate in the corporate profits through the payment of dividends.
Why Incorporate Federal Incorporation in Canada?
Incorporating a business in Canada offers several compelling advantages that make it an attractive option for entrepreneurs. Here are the key reasons why one might consider incorporating their business in Canada:
Incorporation creates a legal entity separate from its owners (shareholders). This means personal assets are protected, and shareholders are not personally liable for the company’s debts and liabilities.
A corporation is often perceived as more stable and credible than an unincorporated business. This can be beneficial when dealing with customers, lenders, and potential investors.
Corporations in Canada may benefit from lower corporate tax rates compared to personal income tax rates. Additionally, there are tax incentives and potential deductions available exclusively to corporations.
Incorporation can provide flexibility in managing personal income and tax planning, which can be an efficient way to control the timing and amount of personal income drawn from the business.
Business in Multiple Provinces:
Ownership in a corporation can be easily transferred through the sale of shares, which can simplify the process of bringing in new investors or altering the ownership structure.
These factors combined can provide a strategic framework for growth and stability that many business owners seek when considering the future of their enterprise. Incorporation isn’t just about the immediate benefits but also setting a solid foundation for long-term success.
Incorporation in Canada can be done at a federal or provincial level, each with its own advantages. Federal incorporation allows you to operate under the same name in all provinces and territories, offering wider recognition. Provincial incorporation, on the other hand, is often quicker and less costly but limits your business operations to the province of incorporation.
Is Federal Incorporation Better Than Provincial?
Federal Incorporation vs Provincial are often exaggerated. The main difference between federal incorporation and Provincial Corporation is Name Protection . Federal incorporation’s name is protected Canada wide. And Provincial incorporation only protects a corporation name in the province where it is registered in.
Both ( federal & Provincial) allow the company to operate in all provinces and service clients from anywhere in the world. Federal corporations require that at least 25% of the directors of a corporation (example: 1 out of 4 directors) must be resident (PR or Citizen) of Canada.
But in Province specially Ontario, Alberta, British Columbia, and several other provinces and territories there are no Canada director residency required.
One of the downsides of federal corporations is that if you choose a Incorporation federally, you’ll also need to register the company in the province where your business is located or Head office is. That take more paperwork and cost more money depending on provinces and territories.
With RegiCorpby the way, all addtional paperworks for federal corporation in any provinces and territories. That will save your money and time. We will take care all of them, you only need to fill up online form in you laptop, PC or Mobile.
How easy it is, correct?
The choice between federal and provincial incorporation will depend on several factors, including the scope of your business operations, where you plan to do business, name protection considerations, and cost. Each route offers different advantages that can be suited to your business needs and goals.
Before you dive into the incorporation process, it’s crucial to choose a unique and legally compliant business name. You’ll also need a robust business plan to guide your company’s operations and financial decisions. Additionally, understanding the costs involved in the incorporation process will help you budget appropriately.
How much does it cost to incorporate a business in Canada?
The cost of incoporating a corporation in Canada depending on your chosen jurisdiction. With RegiCorp, you can choose only the service that you only need. We are not forcing our clients to purchase unnessecary services that may no need for his/her case. That’s why we are offering lowest cost among all providers in Canada.
You can also register directly to the government to incorporate your incorporation, where prices will vary based on your jurisdiction and type of incorporation. in this case, the main dawnside is there are lots of paperworks that need legal compliances and more accurat. If you missed any information in the begainning it will be more costly and time consuming after it add or any alternation.
It’s highly recommended that you hire a legal professional (lawyer or CPA) to help you to prepare all the documents that needed for compliance.
In RegiCorp, Our all incorporation and business pacakge include all government fees, name search and reservation fees, company formation documents as well as 12 months free basic colsultancy at any time.
So, why you waiting for?
Get started and incorporate in minutes with RegiCorp.
The prices of incorporating a corporation as follows:
To incorporate federally with government fee $200 and additional $49 RegiCorp service fee. If you are in Rush you can go Numbered corproation. Numbered corporation can be ready in only 1 hou. You can change the name latter on.
Our service fee is only $49 with government fee. Since, RegiCorp is registerd Partner with Service Ontario you can get your Named corporation or Numbered corporation in only 1 hour. That is enough to open a bank account.
Incorporating Quebec corporation costs $367 CAD, with some addtional cost for business name search report
Incorporating in British Columbia costs $350 CAD, plus an additional $90 charge for name approval.
Incorporation in Alberta costs $335 CAD, the package also offer several services.
This package includes government incorporation $300 , plus a name search report fee of $99 for named corporations. No name reservation fee for Numbered corporation
To incoporate in Saskatchewan , this incorporation package costs around $799 to $999 including Articles of incorporation, certificate of incorporation and name reservation fee.
In New Brunswick, this incorporation package costs around $799 to $999 including Articles of incorporation, certificate of incorporation and reservation fee with expedite queue.
To register a Prince Edward Island coporation your cost would be taround $799 to $999 including Articles of incorporation, certificate of incorporation and Nuans report and name reservation Report fee.
This corporation package including Articles of incorporation, certificate of incorporation and name reservation fee total costs around $799 to $999.
Newfoundland and Labrador: In Newfoundland, this incorporation package costs around $799 to $999 including Articles of incorporation, certificate of incorporation and reservation fee
This incorporation package may charge you around $899 to $999 including Articles of incorporation, certificate of incorporation and Name reservation report fee
This Terrtories corpoation package cost around $1500-$2000
To incorporate in Nunavut you may charge around $1400-$1999
To know details please visit your chosen province and territories corporation package.
How long does it take to incorporate a business in Canada?
In RegiCorp, All corporation package offer 3 different Timeline Frame. The time is depend on many factors like processing system, online or Mannul filing, Registered agent, Partners accounts with Government. RegiCorp have aggremnet with most of the provinces and our all paper work prepared by our in-house lawyers, accountants, and corporation specialist.
Since we are partner. intermmodoearies and collaboration with NUANS, Industry Canada, ServiceOntario, Alberta Registry, BC online Registry and others. That’s why we can corporate your coporation in your chosen timeline like 1 hour, 1 day or in 5 days
Step by step Federal Incorporation Process
The actual process of incorporation involves several steps, from filing the appropriate articles of incorporation to obtaining a federal business number. You’ll need to gather necessary documents, such as a Nuans report for name reservation and forms outlining your corporation’s structure.
What is Required to Federally Incorporate?
- Unique Name
- Director full names and address
- Share structure: Voting or Non-voting
- Registered office address
There are two types corporation. Both types of corporations are legal entities with the same rights and obligations; the difference lies only in how they are identified.
Both have same value but make sure your business name satisfies three legal requirements. It must have
(1) a distinctive element
(2) a descriptive element, and
(3) a legal suffix
What is Numbered Corporation
A numbered corporation does not have a distinctive name chosen by its founders; instead, it is assigned a unique numerical sequence by the corporate registry, followed by a legal element such as “Ltd.,” “Inc.,” or “Corporation.” This option is often chosen for its simplicity and speed, as it bypasses the need for a name search or approval process. For example, a business might be officially registered as “12345678 Alberta Ltd.”
What is Named Corporation
A named corporation has a specific name chosen by the business owners, such as “Amahon Restaurant Inc.” This name must be distinctive, not misleading or confusing with existing names, and typically requires a Nuans Pre-search to ensure it is unique. Choosing a named corporation allows for brand identity and can be beneficial for marketing and customer recognition.
Distinctive element: Amahon
i.e unique name and different from other legal entity
Descriptive element: Restaurant
i.e A term that describes the business dealings of the corporation
Legal suffix: Inc.
i.e you can also choose Limited, Limitee, Incorporated, Incorporee, Corporation, Ltd., Inc. or Corp.)
Filing Articles of Incorporation
Filing Articles of Incorporation is a fundamental step in the legal process of forming a corporation in Canada, whether it is at the federal or provincial level.
This document serves as a charter to establish the existence of your corporation. It is a formal statement that includes key details about the company, such as:
The corporation’s name: This must be a unique name that meets naming conventions and hasn’t already been taken by another entity.
The number of directors: There must be a minimum and maximum number or a fixed number of directors listed, who must meet certain legal requirements.
The corporation’s registered office: The legal address where official documents must be sent.
The share structure and any restrictions on share transfers: Details about the types and classes of shares the corporation is authorized to issue, which determine ownership, voting rights, and dividends.
The purpose of the corporation: Although not always required, some articles include a brief description of the business activities.
Filing these articles is done with the appropriate government body, which is Corporations Canada for federal incorporation or a provincial/territorial registrar for provincial incorporation. Once the government approves the Articles of Incorporation, the corporation is officially registered and can begin operating as a legal business entity. This filing is often accompanied by other documents, such as by-laws and initial shareholder information.
Every federal Incorporation must also register in the province where it has a physical location or Head office.
For example: If you are planning to operate your business in Ontario, then you have to register with Service Ontario as well. If you are planning to have Physical offices in multiple provinces in Canada, you will be required to register extra provincial Registration in each province.
When you request Extra-Provincial Registration during the incorporation process, you can save as much as 50% off the registration costs. To qualify for this discount, simply select the appropriate item on the order form under the Extra-Provincial Registration.
Share structure of a corporation
The share structure of a corporation in Canada refers to the division of ownership of the company through the issuance of shares. When a corporation is formed, it issues shares to its shareholders, who are the owners of the corporation. Here’s a simple breakdown:
Types of Shares: There are generally two types of shares that can be issued: common shares and preferred shares.
Typically come with voting rights and Non-Voting right. Voting share class shareholer have the ability to vote on matters relating to the business.Non-voting shareholders have intended to benefit from the company’s long-term growth, but don’t necessarily want to get involved in high-level decisions
Often have priority over dividends and assets upon dissolution but may not have voting rights.
Classes of Shares: Within these types, there can be different classes, each with its own set of rights, privileges, restrictions, and conditions. For example, one class may have the right to vote on corporate matters, while another may not but might have a higher claim on dividends or assets.
Number of Shares: The corporation decides on the number of shares it is authorized to issue. This can be a set number or an unlimited number of shares, depending on what is specified in the Articles of Incorporation.
Value of Shares: Shares can be issued at various values. There can be par value shares, which have a minimum issuance price, or no-par value shares, which do not have a stated minimum price and can be issued at whatever price the corporation’s board of directors decides.
Shareholder Rights: Ownership of shares comes with rights such as receiving dividends when distributed, voting on corporate matters, and getting a portion of the assets if the corporation is dissolved.
Most Common Role in a corporation
Director: A director is an individual who manages the company on a daily basis.
Who can be a director?
- Anyone age of 18+
- 25% of directors are required to be Canadian
- No bankruptcy or No criminal history
- anyone who is of sound mind
Any individual or legal entity can be a shareholder
an individual who is responsible for overseeing the decisions of the corporation on behalf of the corporation
After incorporating, your business has an obligation to maintain certain documents and records. In exchange for the legal and tax benefits of incorporating, you are expected to keep your corporation up-to-date and in compliance with the law.
Long-Term Maintenance of a Corporation
Maintaining a corporation in Canada involves regular tasks such as annual filings, corporate tax returns, and meticulous record keeping. These are crucial for legal compliance and the smooth operation of your business.
Corporations are required to file Annual Returns with the government. This report includes current information about the corporation, such as the address of the registered office, the names and addresses of the directors, and information about share structure. These filings keep the government updated on the corporation’s status and are necessary to maintain good standing.
Incorporated businesses must file corporate income tax returns every year, regardless of whether the corporation made a profit. This involves calculating taxable income, filing the appropriate tax forms, and paying the required taxes by the deadline. Corporations can benefit from certain tax advantages, but they also face different tax obligations compared to sole proprietorships or partnerships.
We often get the question from our customers that are minute book really necessary? The short answer is yes. To open a bank account some bank also ask to see Minute Book.
Corporations are legally required to keep detailed records. These records include the minutes of meetings, resolutions of shareholders, financial statements, and other official documents like contracts and business transactions. Proper record-keeping is essential not only for regulatory compliance but also for making informed decisions about the business’s future. These records must be maintained at the corporation’s registered office or another location as determined by the board of directors, and they must be accessible for examination by relevant parties.
Adherence to these requirements is crucial for legal and financial reasons and failing to comply can result in penalties or even dissolution of the corporation.
A corporate seal is used to emboss the corporation’s name on legal documents. Most corporations purchase a corporate seal to verify their validity on certain legal documents.
GST/HST account Set Up: Any business that generates more than $30,000 in annual taxable sales has to register for GST/HST
Payroll Account set up: Any business that has employees must register for a Payroll account
Import/Export acccount set up: If you are planning to trade with other countries, this account would be very helpful
WSIB/WCB Account Set Up: This account is mandatory for most industries. It is a government insurnace system for employees.
Incorporating a business in Canada is a process that, while complex, offers significant benefits for your business. With careful planning and adherence to legal requirements, you can establish a strong foundation for your corporation.
Incorporation FAQ for Registering a Corporation
Q1: What is federal incorporation?
A1: Federal incorporation is the process of forming a corporation under the laws of the federal government of Canada. It allows a business to operate under the same name across the country.
Q2: How long does the federal incorporation process take?
A2: The incorporation process can be completed within a few business days if all required documents are correctly submitted and the proposed name is approved quickly. RegiCorp have timeline queue by which you can get in 1 hour
Q3: What are the costs involved in federal incorporation?
A3: Costs include the government filing fee, Nuans report fee for name search, and additional costs if you hire a professional to assist with the process.
Q4: Can I incorporate federally if I am not a Canadian resident?
A4: Yes, non-residents can incorporate federally in Canada, but at least 25% of the directors must be Canadian residents.
Q5: Is a federal corporation taxed differently than a provincial one?
A5: Taxation for federal and provincial corporations is similar, but there can be differences in provincial corporate tax rates and credits.
Q6: Do I need a lawyer to incorporate federally?
A6: While it’s not required, it’s advisable to consult with a lawyer to navigate the legal complexities and ensure compliance with all regulations.
Q7: What are the important guidelines for naming Federal Named Corporations?
A7: All Named Federal Named Corporations must have:
- be distinctive
- not conflict with any Trademark
- not cause confusion with another business or corporation
- not be misleading, and
- not contain prohibited terms or connotations.
Q8:What is a Professional Corporation?
A8: A Professional Corporation is another type of Named Corporation, where the corporation is specifically formed for professions individual like Law, CPA, medicine, optometry, dentistry, chiropractic, or General accounting.
Q:9 Can I incorporate a Professional Corporation Federally?
A9: No. Professional Corporation only can be registered in Provinces with the permission of that Governing Body’s approval.
Q10: What is Fedral NUANS Report?
A10: Newly Updated Automated Name Search (NUANS) is a computerized Government search system that compares a proposed corporate name or trademark. A NUANS search produces a list of names that are the most similar to your proposed name. NUANS software and data is the property of Industry Canada. RegiCorp is a member of Industry Canada.
Q11: Is my Corporation name registered throughout the world or just Canada?
A11: Your Corporate Name will be registered with the Government of Canada not world wide. But You can register your Corporation in other country with obey their compliance. RegiCorp also have collabortaion with money countries like USA, INDIA, Dubai, Bangladesh, Jamaica, Singapur, UK and many more
Q12: Can I change my corporation name later?
A12: Yes. If there is no name conflict you do it later
Q13: What does Canadian Resident mean?
A13: “Canadian Resident” means a natural person who is a Citizan or Permanent Resident through immigration.
Q14: Can a Director be an Officer?
A14: Yes, a director can be appointed to any office of the corporation.
Q15: Directors Residency Requirements
A15: Please see below chart