Provincial vs. Federal Incorporation
The main differences between incorporating a business Canada-wide compared to a provincial level is name selection and protection, business reach, annual filings, and cost.
If a business incorporates provincially, the corporate name is protected within that province. The rules are less strict in terms of the uniqueness of your business name and it will generally be accepted if there are no matches similar to your choice. However, your name will not be protected outside of that province should you choose to expand into other territories in the future.
By registering your business at a provincial level, you may only conduct business within that province and your office must be located there. This does not prohibit you from doing business with companies from other provinces.
Incorporating at a provincial level also involves filing a corporate annual return with your provincial government within 60 days of your incorporation anniversary date.
The cost of provincial incorporation runs higher on average than federal incorporation, but can vary according to each province’s government.
When a business is incorporated at a federal level, it receives greater name protection, but also requires stricter name selection. A NUANS report will search the Canadian database of corporate names to determine if the one you have chosen is distinct from any other registered name in Canada, including names that are only provincially incorporated. Once you receive acceptance from the federal government, the corporate name is protected throughout Canada and all of its provinces and territories.
Incorporating federally also allows your company to conduct business across Canada. There are no restrictions on office location or where your company records need to be kept.
As a federal corporation, you are subject to annual filings with your Director of Corporations branch as well as any additional provincial filings. You will also need to extra-provincially register your corporation for each province that you do business in.
The cost of federal incorporation generally runs at a lower rate than provincial incorporation.
Should I Incorporate Provincially or Federally?
Whether you choose to incorporate federally or provincially depends on the nature of your company’s business. If you own a smaller business operating on a local level and have no plans of expanding across provinces, as well as no national customers or suppliers, it may make more sense to incorporate within your province.
Oppositely, if your company regularly conducts business with other Canadian or international partners and you have plans for establishments in more than one province, federal incorporation may be the way to go.
Incorporation in Each Province
Although incorporating a business follows a similar procedure in each province, there are some differences between each region.
Incorporating in Alberta
To incorporate in Alberta, your business’s registered office must be physically located there and at least one quarter of your board members must be Canadian residents.
Incorporating in British Columbia
To incorporate in British Columbia, your business office must be located there. There is no requirement for how many directors must be Canadian residents.
Incorporating in Ontario
As with the other provinces, those who are incorporating in Ontario must have a registered office located there. Like Alberta, at least 25% of directors must be Canadian. In instances where there are only two directors, one must be a Canadian resident.
Incorporating in Saskatchewan
A business’s registered office must be located in Saskatchewan in order to incorporate. The majority of directors must be Canadian residents and at least one director must be a resident of Saskatchewan.
If I incorporate at a provincial level, can I conduct business in another jurisdiction?
If you incorporate your business in one province, your business is subject to that provincial statute and can only conduct business in that province. To carry out business in another jurisdiction, you can apply to the provincial government for extra-provincial registration, which allows a business to operate in more than one province or territory at a time.