There are numerous advantages to incorporation. It protects shareholders of a company from unlimited liability. A corporation also exists apart from the lifespan of any shareholder, is accompanied by various tax advantages, and also gives an organization a kind of credibility and public standing it might not otherwise have.
So, once the decision is made to take advantage of all these benefits of incorporation, the next question might be: Just where do I actually get incorporated? In Canada, incorporation can be done either federally or provincially. Perhaps the most obvious factor in determining where incorporation should occur is the location of the business itself, its shareholders, etc.
If a company is to do business across Canada, then federal incorporation would not only make sense — it would be mandatory. If the business is strictly local, then provincial incorporation would only be necessary. The decision ultimately depends on specific circumstances.
There are various advantages to federal incorporation. First, it allows an organization to protect the rights to the name of the company right across Canada. This could prove essential if the business will eventually expand. In addition, federal incorporation gives an organization flexibility of location. It doesn’t have to remain in one province. In other words, a primary benefit of being a federally-registered corporation is that it doesn’t limit your options at a future point in time.
However, federal incorporation in Canada can come with the requirement of extra-provincial registration. In other words, if you’re located in one province, but are registering federally, then other provinces where you will do business will require that you also register with them. The Provincial Registrars should be contacted to determine the specific registration requirements within any province.
The process is often not complicated. For example, Ontario doesn’t even charge a fee for its extra-provincial registration procedure. The process can often be completed online within the same business day. In fact, in some cases, it costs less to register as a corporation federally than it does provincially. Again, the specific circumstances of any organization will determine the best course of action.
If you’re in need of professional legal advice, please phone us here at Hosseini Law Firm (HLF) for a 15 minute free consultation: 416-628-4635, or use the contact form provided on this page.