As a federal corporation, you are subject to annual filings with your Director of Corporations branch as well as any additional provincial filings. You will also need to extra-provincially register your corporation for each province that you do business in. The cost of federal incorporation generally runs at a lower rate than provincial incorporation. Ready to incorporate across Canada? Should I Incorporate Provincially or Federally?
If you own a smaller business operating on a local level and have no plans of expanding across provinces, as well as no national customers or suppliers, it may make more sense to incorporate within your province. Oppositely, if your company regularly conducts business with other Canadian or international partners and you have plans for establishments in more than one province, federal incorporation may be the way to go.
Incorporation in Each Province Although incorporating a business follows a similar procedure in each province, there are some differences between each region. To incorporate in British Columbia , your business office must be located there. There is no requirement for how many directors must be Canadian residents. As with the other provinces, those who are incorporating in Ontario must have a registered office located there.
In instances where there are only two directors, one must be a Canadian resident. If it is the next move for you, you may be thinking about how to incorporate your business in Canada. However, when you look into incorporating your business, you may have read that can do this on either the federal or provincial level.
What does this mean? Which is right for you as a business entity in Canada? Although it may seem more tedious to set up, federally incorporating your company has its advantages. When you do so, you will first notice that you go through a stricter name selection through a NUANs name search and Federal examiner. However, this ensures that your corporate company name is protected across the country, its provinces, and territories.
In other words, you can make profits and advertise your business across Canada and benefit from an increase in recognition outside your local jurisdiction. Yet if at any point your corporation uses any other name, you have to register it under the business Names Act, as well.
The CBCA also provides more flexibility in quorum requirements, which is ideal if your founders are located in different cities. Quorum can include shareholders and directors being present via digitally or via conference call. Why is that? Federally incorporated companies wishing to do business in Quebec must in all cases register with the Quebec Enterprise Register.
These companies must register in all provinces and territories where they intend to do business. This means that federally incorporated companies must produce documents for Corporations Canada AND for the Registraire des entreprises, so they will have twice as much paperwork to fill out! Please note that at Lex Start, our fixed-price incorporation kit includes government fees, whether for a federal or provincial incorporation in Quebec.
Another difference between companies incorporated provincially in Quebec and those subject to the federal regime is where they can establish their head office. Whereas, the Canada Business Corporations Act allows corporations to establish their head office anywhere in Canada. In addition, the name chosen by a federally incorporated company not to be confused with its trademark is nationally protected.
This Quebec-based restaurant wants to carve out a place for itself in the Ontario restaurant market. Being federally incorporated, this restaurant will be able to do business in Ontario under the same name. So, if you are already planning for your future company to do import-export business, incorporating your business federally could be a good idea.
Every year a corporation must file an annual declaration at the federal registry. If you are not sure what an annual declaration, please see our recent blog post, linked here. On the other hand, provincial corporations will only file 1 annual update at the provincial registry where their corporation is housed.
In conclusion, it is clear that both provincial and federal incorporations come with certain drawbacks and benefits. As such, we always recommend clients to properly assess what their business activities are and where they plan on exercising them. Corporations should also be aware that any choice made at this level is not indefinite. Corporations can, at any time, file for a business continuance to continue their corporation under a different law of choice.
For more information on business continuance, you can visit our business continuance page here. Finally, if you would like to incorporate a business, please visit our business incorporation page or contact us here. Get in touch. Write us an e-mail or call us, info kalium.
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