Despite the higher start-up costs and administrative requirements, incorporation offers many benefits to a business such as the creation of a separate legal entity, limited liability, lower corporate tax rates, better access to capital and grants and continuous existence.
To incorporate a business in Canada, you must first decide on a name and run a NUANS search to ensure that the name you have chosen is not already in use and cannot be easily confused with another business’ name.
Next, you must decide whether you will incorporate at the federal or provincial/territorial level. Incorporating federally allows your company to conduct business anywhere in Canada and offers national name protection. If your company plans to conduct business in a sole province, you may wish to incorporate provincially instead. In some provinces, you must register for a business number. For federal corporations and in Ontario, your business number is provided to you during the incorporation process.
You will then need to file Articles of Incorporation and supporting documentation with the Ministry of Government and Consumer Services (note: the forms differ for not-for-profit businesses). The cost for filing Articles of Incorporation federally is $200.00 online or $250.00 by mail. For incorporation in Ontario, the filing fee is $300.00 online or $360.00 by mail or in person. It is wise to purchase and maintain a minute book of your corporation’s articles, by-laws, resolutions, share certificates and other documents.
If your business brings in $30,000.00 or more in total revenue annually, you must register for a GST/HST account. A corporation must also apply for any permits or licences that are necessary to run its business.
Regular maintenance of your corporation (including an annual update of your minute book), including updating your minute book, is very important. Ontario corporations must file an annual return within 6 months after the end of each taxation year, and federal corporations must file an annual return within 60 days following each anniversary of its incorporation date. Failure to file can lead to the dissolution of your corporation by the government.
When you decide to incorporate, it is always wise to seek legal advice as mistakes can be very costly. If you are interested in or have any questions related to incorporating, maintaining, reorganizing or dissolving a corporation in Canada, please contact us at Lister-Beaupré Lawyers LLP.