Things to Consider When Incorporating Your Business

Incorporating your business in Canada can provide you with a level of protection in terms of liability. It can also show potential investors that you're serious about handling your business in a professional manner. Before you enter into the incorporation process there are many factors you'll want to consider. 

Will I be able to conduct business throughout the country?

If you make your company a federally incorporated company then you'll be able to conduct business across all of Canada. On the other hand, a corporation who files under OBCA is restricted to doing business in Ontario exclusively, unless it obtains additional licenses. Understand that choosing between a provincial or federal incorporation would depend on the type of business that you run and your vision for the future.

What are all the filing requirements?

As a corporation you'll have to follow the laws of "general application, requiring registration, returns and/or fees" as they apply to each particular province. These requirements are all contained in the CBCA provisions. Additionally, any time there is a change in your corporation you'll need to make necessary filings. There are other restrictions under the Business Names Act which pertains to the name you can select for your company.  

Where can I hold my board of director's meetings?

If you are a federal corporation you can hold those meetings anywhere in Canada. With a provincial corporation those meetings must be held within your province. These requirements should be spelled out in the filing papers.

Filing for incorporation will require you to look ahead to the future of your business. It might seem less costly to do the minimum amount of legal work for a "simple" incorporation application. That approach could come back to haunt you when your business takes off and you look to expand throughout the country. There will be a lot of effort going into your incorporation filing. Make sure you explore all your options to ensure the greater potential for success. In other words, cover all the bases ahead of time and you'll come out on top! 

For more information on incorporation and to place an order to have our experienced paralegals draft  articles of incorporation on your behalf, please visit our website at www.CorporationCentre.ca.

Federal vs. Provincial Incorporation

 What's the ideal structure for your new company?

There are two types of incorporation available for new businesses in Canada;

1)      provincial incorporation

2)      and federal incorporation

The difference between the two types of incorporation lies in whether you want to do business locally or nationally. With a federal incorporation, you will have better protection of your brand and the ability to do business all across Canada even though there may be a business with the same name in a province.

 

With provincial incorporation, you can only operate in the province that you’ve incorporated in. This means that your brand is not protected outside of your province. This does not restrict you from doing business with companies in other provinces, however, you won’t be able to protect your name outside of your province or territory.

There are a couple of downsides to federal incorporation though.

 

·         First, federal incorporation involves more paperwork to be filed every year as required by the Canadian Government and also provincial filings in the province that you’re registered in.

 

·         Secondly, federal incorporation costs more. The fee for filing federal Articles of Incorporation is $200, as well as the additional fees from name search reports and registering your company in province.  Also, the ongoing paperwork each year will cost you more than maintaining your provincial incorporation.

If you plan to be a small business - operating locally, it makes no sense to spend the money to do a federal incorporation. However, if you’re a business that has clients across the nation and even in other countries, it would be a good idea to do a federal incorporation.  If you’re an ecommerce business, where you don’t need a physical location to do business, you don’t need to be federally incorporated if you’re just operating from one province.  You can always be provincially incorporated now and then change to a federal incorporation later as your business grows.