Incorporating a business in Canada can be done with the federal government giving you key benefits when doing business in Canada.
In this article, I will break down the notion of Incorporation Canada so you know all there is to know about it!
Keep reading as we have gathered exactly the information that you need!
Let me explain to you the incorporation of a business in Canada!
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Federal Incorporation In Canada
A federal corporation is a legal entity that is created by the federal authorities and subject to Canadian federal statutes.
Many business owners and entrepreneurs doing business in Canada will want to incorporate a Canadian company to operate their business for various reasons.
The most notable benefit of having a federal business entity is that you have the right to use your company name across Canada.
Also, just like any other corporate entity, a Canadian corporation will offer business owners and entrepreneurs limited personal liability.
In other words, business creditors will not be able to pursue the shareholders of the corporation on a personal basis.
In essence, you can incorporate a federal corporation to operate any type of business in Canada, whether it’s for-profit or not-for-profit.
Keep reading as I will break down the federal incorporation process in Canada and provide you with key reasons why it may be a good option in some cases.
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Why Incorporate A Canadian Corporation
There are several reasons why some entrepreneurs or business owners may want to consider a Canadian incorporation.
In Canada, you can either incorporate a company at the federal level or at the provincial level.
Corporations incorporated federally are subject to the Canada Business Corporation Act whereas provincial corporations will be subject to the applicable provincial statutes.
Since a federal corporation is incorporated at the federal level, you will have the right to use your business name across Canada.
In other words, you can achieve greater corporate name protection.
A federal corporation provides shareholders with limited liability protection.
This is very useful when entrepreneurs are looking to protect their personal assets and patrimony from business creditors.
Another important reason why a federal corporation may be a good option for you is that corporate tax rates can be more favourable for you.
Corporations, in general, provide various benefits when operating a business, such as a more flexible ownership structure, better ability to raise capital, a continuous lifespan, and more business credibility.
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How To Incorporate A Federal Corporation
Incorporating a federal corporation can be done in a few steps.
Step 1: Name Your Corporation
The first step is for you to find a name for your corporation.
If you are looking to give your federal corporation a specific name, you must make sure that it does not conflict with another corporation registered in Canada having the same or a similar name.
You also have the option of giving your entity a numbered name which will be eight numerical digits followed by Canada Inc. (example, 12345678 Canada Inc.).
Step 2: Create Your Articles of Incorporation
Every federal corporation must have articles of incorporation.
The articles of incorporation provide the governing rules applicable to the company, and define the different classes of shares, the number of board members the corporation can have, and the name that has been assigned to your corporation.
Depending on your needs, you can include other provisions in your company’s articles of incorporation such as restrictions on corporate activities and others.
Step 3: Establish the Initial Registered Office Address and First Board of Directors
The third step is for you to determine the corporation’s registered office address and name your first board members.
Every corporation is required to have a registered office address which is the corporation’s formal address to receive official documents, letters, or notices.
Also, at least 25% of the directors of a Canadian corporation must be Canadian residents.
Step 4: Submit Your Articles of Incorporation And Pay Filing Fees
The final step in the Canadian incorporation process is to file your articles of incorporation with Corporations Canada and pay your filing fees.
Your federal incorporation cost is going to be $200 if you use the Corporation Canada online platform.
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Corporation Canada Platform
To incorporate a Canadian corporation, you can go to the Corporation Canada website who offers an online platform allowing you to create your corporate entity.
Corporation Canada oversees the creation of federal corporations and their compliance with federal laws such as the Canada Business Corporations Act (CBCA), Canada Not-for-profit Corporations Act (NFP), Canada Cooperatives Act (Coop Act), and the Boards of Trade Act (BOTA).
Companies that are looking to operate in Canada, have one unique name across the country and have a corporation that is recognized worldwide should consider federal incorporation.
This is in addition to the standard benefits that are offered by corporations such as easier access to capital, lower tax rates, limited liability protection, continuous existence, and a more flexible ownership structure.
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So there you have it folks!
Are you looking for incorporation in Canada?
A business incorporation in Canada can be an interesting avenue for many entrepreneurs and businesses looking to operate a business in Canada, expand their operations in Canadian territory, and tap into the Canadian market.
The most notable reason why federal incorporation is considered is that you can have better corporate name protection across Canada than if you were to incorporate at the provincial level.
A federal corporation offers many advantages such as limited personal risk, unlimited number of shareholders, ability to raise capital, various tax advantages, ability to transfer shares to other shareholders, and continuous existence.
If you’re looking to incorporate a company, be sure to consult with an incorporation attorney to get advice on what’s best for you so you start your business on the proper note.
AK-Law is a boutique law firm having a core focus on all facets of the business. We support businesses of all sizes in their day-to-day as well as strategic legal needs. If you want to know more about our firm, better understand what we do, or get a quote, be sure to reach out!
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