A federal or Canada corporation is completed through the federal government instead of any of the Provincial incorporations available across Canada.
What does a federal/Canada incorporation offer?
A federally incorporated company offers all of the same benefits as any Provincial incorporation such as:
- Limited liability protection for individuals
- Name protection (if business is named and not numbered)
- Flexibility to make changes such as the corporate name, address, directors, share structure
- Potential tax advantages
- Existence is continual (never require to renew or re-register)
- Greater access to capital
- Better branding if also completing trademark on same business
Why choose a federal incorporation over a Provincial Incorporation?
This is a question, we get almost everyday. There are advantages and disadvantages to completing a federal incorporation.
- Government fees to incorporate $200.00 (this is cheaper than most provinces)
- Higher recognition around the world
- In general better name protection for the business name once obtained
- Import and export licences is with the federal government
- Typically more difficult to obtain name approval for business name
- Annual return filing – every year required to update corporate record with government
- Business name must be approved by federal government examiner
- May take a day or two longer to gain approval and complete incorporation
Here are a few simple questions that may assist you in determining if a federal corporation suites your needs.
- Do you see opening physical locations for your business in other Provinces?
- Are you planning on advertising your business outside of your Province?
- Are you planning to trademark the same name?
- Are you in business with foreign countries?
- Will you be importing or exporting?
If you answered yes to any of these questions, perhaps a federal incorporation may be a good option for you.
Our information is simply a guide to assist you, we are not a law nor accounting firm. You may want to speak to professionals before you decide what is the best direction for you.