Most people end up incorporating provincially because it’s generally easier to apply for and maintain. By way of example, here are some of the factors you’d consider between an Ontario and a Federal incorporation.
|Name Selection||Basically they’ll accept anything that isn’t an exact match in their Ontario-biased database. No human being reviews or ‘approves’ the name.||A real life human being, called an Examiner, looks at the NUANS name searh and your proposed name. If they consider it to be confusing in the search, they will refuse your name.|
|Name Use||You have the right to carry on business in Ontario under your corporate name.||You have the right to carry on business anywhere in Canada under your own corporate name, although you may require registration in any province or territory where you do business..|
|Registered Office||Must be in Ontario||Must be in Canada|
|Initial Cost||Government charge of $300 for efiling of incorporation.||Government charge of $200 for efiling of incorporation.|
|Annual Filing Fee||No charge for annual filings. Usually done as part on your corporate tax return||There is a charge of $20 for the online annual filing|
|Post-Incorporation Minute Books||Straightforward.||Straightforward|
Using their Corporate Name, Extra-Provincial Licences, & Name Registration
In general, a federal corporation is entitled to carry on business anywhere in Canada under its name. However, this is subject to the licensing and registration requirements of the province where the business is carried on. Two such common requirements are Extra-Provincial Licencing and Name Registration.
For a federal corporation, the first issue to be addressed is where the head office will be. It can be anywhere in Canada. However, once you register in that province, you become subject to its requirements. For example, let us assume that the federal corporation has decided to make its registered office in Ontario. As a result it must regularly file certain corporate information. Similarly, if a non-Ontario corporation carries on business in Ontario, it must register for an Extra-Provincial Licence.
Extra-Provincial Licences & Name Registration
An Ontario corporation doing business in another province generally requires an extra-provincial licence must register in that province within the required time limit. In Ontario, for example, it must do so within 60 days of commencing business in Ontario.
If the corporation uses a name other than its corporate name, this name must be registered under the Business Names Act. The Ontario government charges $60-80 for a five year registration. Please note that your request to do business under that name may be refused.
Use of Corporate Name
If you are an Ontario corporation, you are entitled to carry on business under your corporate name in Ontario without registering that name. If you do business outside Ontario, you are generally required to register your name in that province.
If you are a federal corporation, you are entitled to use your corporate name in any province in Canada. However, you may still be required to meet other provincial requirements, dealing with such matters as registration, taxation and reporting.
An Ontario corporation is required to file a combined Corporation Tax and Annual Return every year. This includes the corporate information on directors, officers, etc. There is no charge for this filing. A federal corporation must annually file a Corporation Tax Return and a Corporate Information Return — two separate documents. The fee for the Corporate Information Return is $20 if filed online.
Changing an Ontario Corporation into a Federal Incorporation & Vice Versa
You must apply to both the federal and provincial governments for approvals, in what is a very long and expensive process. Together, the two levels of government charge around $600 for fees alone. It’s much easier and quicker to just do a new incorporation, if at all possible.