Wondering how to incorporate a business in Canada? Let's look at the general steps involved, from choosing where to incorporate to reserving a corporate name and filing your documents. Note that the specifics of each step may differ from province to province.
Decide Whether to Incorporate Federally or Provincially
When you incorporate your business federally, the main advantages are:
- Your corporation will be able to carry on business in all provinces and territories (as long as you register your corporation in all the provinces in which you will be conducting business).
- It will be able to use the same name in each province or territory, even if another company is already doing business under a similar name.
- The corporation will be recognized internationally.
The disadvantages are:
- You will face stricter name requirements, which involve a NUANS name search and verification process (more on this below).
- There’s a lot more annual paperwork, as you must keep up to date with not only the filings required by the federal Director of Corporations Branch but all filings required by the provinces.
If you incorporate provincially, your corporation only has the right to carry on business in the province or territory where your business is incorporated. The decision to incorporate federally or provincially depends more on the scope of your company than anything else.
If you are setting up a one-person or small nonreporting corporation and only planning to do business in one province for now, there's probably no need to incorporate federally. You can always incorporate your business in another province (called extra-provincial incorporation) as your business expands.
Choose a Corporate Name
Selecting a corporate name is more difficult than choosing a name for a sole proprietorship or partnership because there are more stringent name requirements when you incorporate your business. Generally, a corporate name is composed of three elements;
- A distinctive portion that identifies the particular corporation
- A descriptive portion that identifies the particular activities of the corporation
- A legal element, identifying the company as a corporation, such as Limited, Incorporated, or Corporation.
A corporate name cannot include a misrepresentation of your business. For example, it cannot imply that you are a branch of government, or that your business is aviation when you sell shoes. Nor can the name contain obscenities or imply that the business is conducting illegal activities.
Note that corporate names in Canada can be in English or French, in both English and French, or in a combined English French version. But the procedure is complicated by the fact that the registrar (of the provincial registry or Corporations Canada) will demand a corporate name that is not identical to or similar to any other existing company names.
Have Your Corporate Name Searched and Reserved
No matter where you incorporate your business in Canada, you will need to have a name search done to determine the suitability of the corporate name you have chosen. If you are incorporating federally, or in provinces such as Ontario, you will need to have a NUANS search done (and then submit the resulting NUANS report with your articles of incorporation).
In other provinces, such as British Columbia and Nova Scotia, you must have a name search done once you’ve submitted a name approval request or name reservation request form. If the results of the search are acceptable, and your name is accepted, it is then reserved for a set number of days, during which you must complete the incorporation process for your business or restart the procedure all over again.
Prepare Your Documents
Generally, to incorporate your business, you will need to prepare the following documents:
- The Articles of Incorporation: the rules and regulations that will govern the conduct of the company members and directors.
- The Notice of Offices: states the location of the two required offices for your corporation, the registered office, and the records office.
- The Memorandum: sets out the rules for the conduct of the company.
If you are incorporating federally, you will also need to prepare a Notice of Directors (and submit a federally-based NUANS report). If you are filing provincially, be sure you check the document requirements for your specific province before you proceed to the next step.
File Your Documents and Apply for Incorporation
Corporations Canada and the provincial registries have websites where you can incorporate your business online. You may also submit your application for incorporation the old-fashioned way by mailing the forms and fees to the appropriate registrar. Then you're all set to get your corporation up and running.