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INCORPORATION LEARNING CENTRE

 

 

Advantages of Incorporating:

  • Ability to Raise Capital: A corporation may be able to obtain its own investments or credit.
  • Adding Operating Name/s: If you wish to use your business name without the legal ending for such things as signage or if you want to operate more than one business, you can add additional business names under your existing corporation. 
  • Director Flexibility: Since the corporation has its own identity, it is not affected if directors, officers, or shareholders of the corporation change as long as the minimum director/s remains. This is also beneficial for estate planning as the corporation continues to exist after the shareholders die.
  • Grants/Venture Capital: A corporation may have the opportunity to gain financial assistance.
  • Hold Investments: A corporation may hold its own assets including stocks, bonds, and real estate investments.
  • Incorporation Never Expires: Once you have completed the incorporation, there is no requirement to re-register or renew the incorporation. The incorporation is continual throughout time, as long as you wish for it to be active.
  • Limited Personal Liability: A corporation has its own identity separate from the people who are involved in the business.
  • Name Protection for Business Name: The name that you choose for your corporation becomes protected upon completion of the Articles of Incorporation within the jurisdiction of incorporation. If someone, after you have incorporated, decides to use the same name, the name will be refused. If someone registers or incorporates a similar name, you may be able to proceed with a name change to the infringing business name.
  • Overall Flexibility: With a corporation, you can change whatever is required over time including the name of the corporation, directors, officers, shareholders, share structure of the corporation, and minimum and maximum number of directors.
  • Potential Tax Advantages: There may be tax advantages to incorporation. A corporation in most cases has lower tax levels than any individual tax bracket.
  • Separate Identity: The shareholders of the corporation are not liable for default, obligation, or liability that the corporation has incurred unless the shareholders give personal guarantees.

Disadvantages of Incorporating:

  • Costs: The initial costs for a corporation are higher than other options available for businesses, which is approximately $450.00.
  • Paperwork: Having a corporation means more paperwork in most cases. Not only are you required to maintain personal records for yourself as a shareholder, you are also required to maintain the records for the corporation.
  • Tax Filing: Since a corporation has its own identity, it also has to file its own tax returns. The individual shareholder must file his/her personal tax return along with a secondary tax return for the corporation.
Incorporate From $99.99*

*plus government/disbursement fees

Why a Canada/Federal Incorporation?

Whether you decide to Federally or Provincially Incorporate is solely a personal choice; both are available to you for incorporation. Ontario Business Central has years of experience completing both Canada/Federal and Provincial Incorporations.

Here are general reasons why individuals seem to choose a Canada/Federal Incorporation rather than a Provincial Incorporation:

  • Offers better name protection for the business name across most of Canada.
  • Is more recognized by foreign jurisdictions for importing and exporting purposes.
  • Multiple jurisdictions where you intend to have physical locations for the business in more than one Province or Territory.
  • Advertising your business outside of your Province.

What is required to incorporate in Canada?

The first decision is whether to incorporate a numbered or named incorporation.

Numbered Incorporation
The Federal government will provide a 7 digit number from your submission when you select a numbered corporation with the word Canada and a chosen legal ending.
Example: 1234567 Canada Inc.

Often a numbered corporation is selected when

  • The name of the business will not be advertised, such as a real estate property holding company.
  • Multiple businesses will be registered as operating names and a generic corporate name is suitable.
  • In a franchise situation where a corporation is required but the business name is protected by the franchise provider.

Named Incorporation
This is when you wish to advertise a business name for your corporation.
Example: DEF Holdings Inc.

Often a named corporation is selected when

  • Naming the corporation is important for advertising.
  • Name protection is important where no one can use the same name within the same jurisdiction.

Choosing a Legal Ending
There are a number of options available for the legal ending of your incorporation including Inc., Incorporated, Ltd., Limited, Corp., or Corporation. You may choose whichever ending suits you or sounds preferable with your business name.

Additional Information Required for Incorporation:

  • head office address
  • legal names of directors (please provide as listed on photo ID, such as Driver’s Licence)
  • address/es for directors
  • share structure (we provide the options of either 1 or 2 classes of shares or you can provide your own)
Incorporate From $99.99*

*plus government/disbursement fees

Who can be a director of a Canada/Federal corporation?

  • individuals who are 18 years or older
  • individuals who have not filed for bankruptcy (if bankruptcy has been filed, please speak to your trustee about your ability to incorporate)
  • individuals who have no criminal record
  • a minority of 25% of the directors listed for a Canada/Federal corporation are required to be either Canadian Citizens or Permanent Residents

How long does it take to process?

Ontario Business Central begins the processing on a same day basis. Typically, it takes 1 to 2 business days to complete the incorporation with the Federal government examiners. We offer rush services for Canada/Federal Incorporations where if processing with the Federal examiners is completed before 1:00 pm on any business day, we will receive confirmation and completion on a same day basis.

Choosing a Corporate Name

Choosing a corporate name for your business can be one of the most difficult things to do. To make it easier for you, we break it down into four primary elements:

Distinctive Element: This is usually the first word identifying something about your business and what you wish to convey.
Examples:

  • Johnsons, Mike's, John Smith (personal or family name)
  • Quick, advanced, professional, accurate (dictionary word, separating you in some capacity from competitors)
  • Bizchat, Prolette, Tonzons (coined or made up word)

Descriptive Element: This provides what products or services relate to your business. It is much easier for clients to find you when your business name includes what you are providing.
Examples:

  • Bar & Grill
  • Carpet Cleaning
  • Investments
  • Music Studio

Legal Element: Choose whichever legal ending suits you or sounds best with your business name. The options are listed within the website.

Specific Business Name Requirements for a Canada/Federal Incorporation: It is very important when incorporating a Canada/Federal Incorporation to ensure you choose a very unique business name and provide a descriptive element to that business name. The name protection available with a Canada/Federal Incorporation is only secondary to the Trademark registration in Canada (highest level of name protection available within Canada). In choosing to incorporate a Canada/Federal Incorporation, the scope of existing business names throughout Canada is much larger than with a Provincial Incorporation. The business name you choose will be reviewed against similar business name conflicts across most Provinces. Ontario Business Central has been assisting individuals for many years to gain approval of their business names and often will assist to strengthen the business name for acceptance with the Federal examiners.

Incorporate From $99.99*

*plus government/disbursement fees

What is a NUANS Report?

A NUANS report is a mandatory 7 page report required when incorporated within most jurisdictions in Canada. It is very important that you order the NUANS report specific to the jurisdiction where incorporating. With a Canada/Federal Incorporation, a Federal NUANS report is required. The report provides a listing of small businesses, corporations, and trademarks that are similar to the name you wish to incorporate.

A pre-search is commonly completed. This is a search of the proposed business name to see if it is available prior to ordering the 7 page NUANS report. If a name is not available, additional names may be provided.

The Federal pre-search and NUANS report are preselected for you within our incorporation packages.

The NUANS report is provided to the Federal examiner with Industry Canada for review and acceptance along with the incorporation documents.

Why incorporate a Canada/Federal Incorporation instead of a Provincial Incorporation?

Sometimes the decision between completing a Canada/Federal Incorporation to a Provincial Incorporation may seem difficult.

Here are highlights of some differences between comparing the two different options:

A Canada/Federal Incorporation provides

  • Typically a cheaper government fee to establish the incorporation, which is approximately $200.00.
  • Better business name protection.
  • A higher level of recognition worldwide.
  • Yearly annual return filings with fees of $20.00.
  • A business address within any Province or Territory.
  • A strengthened trademark application.
  • That it is required to be listed with the Provincial government where located.
  • That if updates are required, both the Federal and Provincial governments may require updates. An example may be a physical address change for the corporation.

A Provincial Incorporation provides

  • Usually a higher government fee for incorporation.
  • Easier name approval for business name.
  • Less administration where usually yearly document filing is not required.
  • A business address that must be within the Province selected.
Incorporate From $99.99*

*plus government/disbursement fees

Do I need to register the Canada/Federal Incorporation within the Province the business address resides?

When a Canada/Federal Incorporation is completed, a secondary filing must be completed within the Province or Territory where the business is physically located.

Often, there are additional fees to bring a Canada/Federal Incorporation into the Province or Territory selected. Some Provinces have the availability to request the Provincial registration as the Canada/Federal Incorporation is being completed. Other Provinces and Territories require manual filings.

Do I need corporate supplies - minute book and seal?

The minute book is an organizational tool for your new corporation. It provides the share certificates, and tabs for officers, directors, and shareholders of the corporation along with other supporting documents. We recommend it if you have partners. The minute book should be updated each time you have a change within your corporation.

The Mark Maker Seal is an embossed impression with your corporate name and jurisdiction where you have incorporated. The seal is commonly used when you are doing business transactions. The corporate supplies are listed as an option within our incorporation packages.

How do I apply for HST and Payroll?

These accounts can be set up for free by going directly to the government contacts and websites. We provide you with each of these contacts along with many more to assist you as you begin your business.

HST
HST (harmonized sales tax), formerly GST and PST, is mandatory only if your corporation grosses $30,000.00 or more within the same fiscal year. Until this income is met, HST is optional as is the set up of an HST account. As an example, the current tax rate is 13% within the Province of Ontario. When you operate a business and have an HST account, the HST you pay out for business expenses is subtracted from the HST you take in from clients and customers. Each quarter, a tax filing is required to Revenue Canada providing the difference between the two.

Sometimes, it may be beneficial to wait to set up an HST account to offer clients and customers a no tax incentive for your business. Other times, where you have a large number of expenses to set up your business, it may be beneficial to set up an HST account right away.

Payroll
Payroll is to be set up whenever you begin employing individuals within your business.

What is a Tradename?

A tradename is a Master Business Licence (small business) operating under an incorporated company. This may be an option for you if you wish to operate a secondary business name or the same name as your corporate name without the legal ending for such things as signage. The tradename is only available at the Provincial or Territorial level. The Canada/Federal Incorporation must be brought into the Province or Territory prior to registering the tradename.

Examples:
ABC Holdings Inc. carrying on business as DE Restaurant (operating a secondary business name)
ABC Holdings Inc. carrying on business as ABC Holdings (for signage, advertising where the corporate legal ending of Inc. does not appear)
1234567 Ontario Inc. carrying on business as ABC Holdings (operating name under corporation)

Important Things to Know About Tradenames:

  • they do not have name protection for the business name as your corporate name does
  • the registration is attached to your corporation and therefore attached to the same bank account, Revenue Canada, and other tax accounts
  • keeps administration to a minimum with the business operating under the same accounts as your corporation
  • there is no maximum number of tradenames you can register under your corporation
  • limited liability protection as owned by your corporation

Tradenames can be added within your incorporation package with us.

What to Do After Incorporation Has Been Completed

BN Number
Once your Canada/Federal Incorporation has been completed, you will receive the BN number from Revenue Canada to your corporate head office address. The BN number is similar to your social insurance number as an individual. The BN number is used for all tax accounts with the Federal government including corporate tax, HST, and payroll. Once you have received the BN number, you may go to Revenue Canada's website (we will provide you all of the details) and set up HST and payroll accounts when applicable.

After Setting Up a Completed Incorporation:

  • attend a financial institution with the Articles of Incorporation (completed incorporation) and tradename (where applicable) with photo ID of corporate directors
  • obtain cheques (often offered by financial institutions and private companies)
  • create business cards (ensure you use the full legal name of your business on the business card)
  • consider a domain name (if you wish to create a website for your business)
  • set up any tax accounts required (once you have received the BN number from Revenue Canada)
  • obtain an accountant or bookkeeper
  • consider completing a share agreement if it is a partnership business (more than one person)
  • fill in your minute book with details of your incorporation including distribution of share certificates to shareholders
  • associations - consider joining an association within your industry or business group within your community 

Ontario Business Central provides a free bizguide with each completed incorporation. This guide provides relevant information on taxation, organizing your business, dealing with employees, associations, Canadian business support services, and so much more.

There is also additional information within our blog articles (see links below). Please feel free to contact our office for any additional questions you may have.
We are available Monday through Friday 9:00 am to 5:00 pm.

 

Incorporate From $99.99*

*plus government/disbursement fees

 

 

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