Creating a corporation in Canada has a number of benefits over small business registration. A corporation is considered to be a separate legal entity from the owners. This means they would have a lower corporate tax rate, name protection, separate income tax filings and limited personal liability.
There is no limitation to the size of the corporation must be, and even a very small operation can incorporate.
A corporation would establish itself in whichever Province the business operates. The requirements for incorporation in Canada vary slightly, depending on which Canadian jurisdictions you are incorporating in. There are some basic requirements that all corporations would need, regardless of where it’s being created.
What does Incorporation mean?
An incorporated business allows business owners to operate the business as a separate entity to his or herself. The benefits of incorporating are the limited liability to the person and therefore the personal assets of the individuals who own the business from the risk of operating the business, tax advantages where a corporation is taxed at a lower rate than the personal tax rate for individuals. It is important to maintain the revenues of the corporation within the corporation’s bank account and to not draw the money over to a personal bank account. When money is taken from the corporation to the individual owners, the tax implications move to the individual at a higher tax bracket.
Do I need to incorporate?
This is a question each new business start-up must ask him or herself. There are only two options available when starting a business in Canada. The first is to register your business. When registering a business, you are able to operate a business in Canada but the registration has limitations to its platform in comparison to incorporation. An incorporated business provides as discussed the limited liability protection and tax advantages. It also offers protection against someone using the same business name within the jurisdiction of incorporation, flexibility to make changes to the business over time including changing the name of the business, the ability to operate a secondary business or carrying on business name under the existing corporation, access to venture capital funds, grants and or loans.
Here is what is required to incorporate your business:
- Corporate Name, unless it is a numbered corporation
- Registered office address and mailing address
- Directors to list, and their addresses
- Minimum and maximum number of directors
- Share structure to be used
Citizenship requirements for board of directors
All Provinces and Territories, as well as Federal Incorporations require at least 25% of the board of directors to be Canadian Citizens or Permanent Residents. The only Province that does not have this requirement is British Columbia.
NUANS Name Search Reservation
Unlike a Sole Proprietorship, General Partnership or Trade name, corporations are given name protection in the jurisdiction they are incorporated. Because corporations have name protection, a NUANS name reservation for the corporation is required for most jurisdictions. This name reservation holds the proposed business name for 90 days, in which you can complete the incorporation process.
Three jurisdictions do not require a NUANS name reservation. These include Saskatchewan, Manitoba and British Columbia. However, a name reservation is required to be completed directly with the Province.
Consider pre-searching the proposed business name first, whether you are ordering a NUANS name reservation or need to reserve your name directly with the Province. This helps avoid any potential conflicts from matching or similar names of existing businesses, corporations or Trademarks.
Other naming considerations
Corporations do have name protection in their jurisdiction. However, there are other factors you may want to take into account when choosing the name of your business. Not all types of businesses have name protection. However, you may still want to consider naming your corporation something too similar to another business for these reasons:
- Bad reputation – If another business has developed a bad reputation, that may reflect poorly on your corporation.
- Advertising – If there is another business with a similar name in your area, you may unknowingly be advertising for them.
- Protected names – Avoid infringing on other existing corporations and Trademarks that already have name protection.
How long does it take to create an incorporated company?
For most jurisdictions, we can have the Articles of Incorporation created as quickly as the same day.
For those jurisdictions that require Provincial name reservation and approval, the timeline may be slightly longer. This is because the Provincial examiner must approve the name first, before the incorporation process can be completed.
When you are ready to incorporate, Ontario Business Central can help you through the entire incorporation process from start to finish. We can assist with incorporating in the following jurisdictions:
The Provincial and Federal Acts to Incorporate a business
To assist you to understand the incorporation process, we have included the ACTS in each jurisdiction where we offer incorporation services
British Columbia Business Corporations Act
Canada/Federal Canada Business Corporations Act
Manitoba The Corporations Act
Ontario Corporations Act
Saskatchewan The Business Corporations ACT ISC
Cost to Incorporate
Each Province and Territory in Canada have different fees associated with the government fees to incorporate. Overall, with using us including government fees, the costs are $550+ depending on the jurisdiction for incorporation. The corporate supplies including the minute book and corporate seal, share certificates and by-laws are not included in this pricing but typically the corporate supplies add an additional $180.00 to the costs if included.
Ontario Business Central is here to assist you to start your business.
If you have any questions about incorporating, please feel free to contact our staff for additional information and assistance.
Office Hours: 9:00am – 5:00pm
Monday – Friday E.S.T.
Ontario Business Central Inc. is not a law firm and cannot provide a legal opinion or advice. This information is to assist you in understanding the requirements of registration within the chosen jurisdiction. It is always recommended, when you have legal or accounting questions that you speak to a qualified professional.