What You Need to Know About Incorporation in Canada
Your Questions Answered
If you are wondering about how to incorporate a business in Canada, it's important to review all of the relevant questions about what it entails. You need to know the difference between provincial and federal incorporation and how to incorporate your business in a particular province or territory.
Frequently Asked Questions About Incorporation in Canada
Get some quick answers to some of the most commonly asked questions about incorporation in Canada, and click on the links for more detailed explanations about each topic.
What is incorporation?
Incorporation establishes a legal separation between a business' finances and its owners' finances. It differs from other forms of business structure in Canada, such as sole proprietorships and partnerships. Learn about the benefits and drawbacks of incorporation.
How do you incorporate your business in Canada?
The process is about more than just choosing your corporate name. Multiple incorporation documents need to be prepared and filed, and there are options to incorporate federally or provincially.
What are the different types of corporations in Canada?
Not all corporations in Canada are created equal when it comes to corporate taxes. Canadian-controlled private corporations enjoy corporate tax advantages other types of Canadian corporations don't. It's important to learn about the differences and how it can impact your own business.
What is the difference between federal and provincial incorporation?
Once you've decided to incorporate in Canada, you have to decide whether to incorporate federally or set up your corporation in a particular province or territory. There are advantages and disadvantages to both. Learn about details for each province or territory:
How much does it cost to incorporate?
Costs depend on where you choose to set up your new corporation as federal incorporation and provincial incorporation is different. Compare the two before making your decision.
What is a NUANS search and why is it necessary?
A New Upgraded Automated Name Search (NUANS) is a Canada-wide corporate and business name registry that displays corporations, business names, and trademarks similar to the name you have searched. No matter where you incorporate your new company, you will have to get at least one of these done as part of the incorporation process because one of the characteristics of incorporation is the business name protection it provides.
Can you set up an LLC in Canada?
LLCs are popular types of incorporation in the U.S., the U.K., Mexico, and other countries, but Canada does not have an equivalent corporate structure.
What is extra-provincial incorporation?
Being incorporated in one province or a foreign jurisdiction such as the U.S. does not automatically give you the right to conduct business anywhere in Canada. The different provinces and territories demand, in most cases, that corporations that have been incorporated elsewhere register with them and pay a fee before they can do business within their borders.
What constitutes doing business in other provinces where you are not incorporated?
Depending on your intended business activities, you may not be required to register in other provinces where you intend to conduct business. Even if you have to do so, the process of registering your business in another province may be simple if the two provinces have reciprocal agreements for business registration.
How do you set up shares for a new corporation?
There are many ways to set up the share structure for a corporation, depending on the number of owners, dividend requirements, taxation and estate issues, and other factors that should be taken into consideration. Deciding this is something you need to do even if you’re setting up a corporation of one.
Salary or dividends: How do you pay yourself?
There’s no short and simple answer to this question, but it’s really important to get it right because of the potential tax repercussions. Learn about the pros and cons of each of the ways you can take profits out of your corporation and some suggestions for creating the best tax scenario for yourself.