How to Incorporate in Canada
If you plan to incorporate in Canada, first you should decide how you would like to incorporate, under which name and prepare the required documents.
First of all, you must decide whether you’re going to incorporate federally or provincially.
If you incorporate your business federally, the two advantages are:
- Your corporation will be able to carry on business in all provinces and territories (as long as you register your corporation in all the provinces you will be conducting business in)
- Your corporation will be able to use the same name in each province or territory, even if another company is already doing business under a similar name
The disadvantages of federal incorporation are:
- Federal incorporation cost more to set up
- There’s a lot more annual paperwork, as you must keep up to date with not only the filings required by the federal Director of Corporations Branch but all filings required by the provinces
If you incorporate provincially, your corporation only has the right to carry on business in the province or territory where your business is incorporated.
The decision to incorporate federally or provincially depends more on the scope of your company than anything else. If you are setting up a one person or small non-reporting corporation, planning to do business in one province for now, and maybe another one or two later, there’s probably no need to incorporate federally. You can always incorporate your business in another province.
Selecting a corporate name is more difficult than choosing a name for a sole proprietorship or partnership, because there are more stringent name requirements when you incorporate your business. Generally, a corporate name is composed of three elements: a distinctive portion that identifies the particular corporation, a descriptive portion that identifies the particular activities of the corporation, and a legal element, identifying the company as a corporation, such as Limited, Incorporated, or Corporation.
Please note that corporate names in Canada can be in English or French, in both English and French, or in a combined English French version and also the Registrar (of the provincial Registry or federal Corporations Directorate) will demand a corporate name that is not identical to or similar to any other existing company names.
No matter where you incorporate your business in Canada, you will need to have a name search done to determine the suitability of the corporate name you have chosen.
Generally, to incorporate your business, you will need to prepare the following incorporation documents: a memorandum (sets out the rules for the conduct of the company), the articles of incorporation (the rules and regulations that will govern the conduct of the company members and directors) and the notice of offices (states the location of the two required offices for your corporation, the registered office and the records office).
The federal Corporations Directorate and many of the provincial registries now have web sites where you can incorporate your business online. You may also submit your application for incorporation by mailing the incorporation forms and fees to the appropriate registrar.
