But if you have international clients or customers then federal incorporation will be the best option for you under Canada Business Corporation Act.
To run a sole prop business or a corporation would be a daunting task, so the best way to leverage the business outcomes is to hire a law firm like BG Accounting and Business Solutions.
We make sure your hard-earned money will stay in your pockets through comprehensive case studies and expert opinions. Reach out for a free consultation now.
Federal and provincial incorporations both stimulated pros and cons for the business owners. You should keep an eye on these aspects as per your business module before getting yourself registered for one.
Federal VS Provincial
As we mentioned earlier, Canada Corporations Business Act (CBCA) handles federal incorporations, while Ontario Business Corporations Act (OBCA) offers incorporations at the regional level.
If you look closely, both authorities provide the same level of end-product. Yet, there are a few contrasts while processing.
· Name Protection
Business name protection is the most important factor why people go for federal incorporation. It gives you better name coverage and wider rights to carry out activities for the business.
You can expand your business affairs across Canada under the same name even if some other company is already registered in a province with a similar one.
You need to suggest a distinctive name for your business which will be reviewed by the authority to see if it won’t be exactly similar to the already existing one.
Under provincial incorporation, you cannot protect your business name as it can be easily used by anyone in the state or country.
Thus, federal incorporation is more likely to be a prestigious registration. It should be the preferred mode for businesses trading services globally.
· Cross-Provincial Registration
Although you are operating under federal incorporation, you also need to register for extra-provincial licenses as well. The business must register in the province in which they will conduct activities.
For say, if you are incorporated federally in Ontario, at the same time, you can register for Manitoba, Alberta, or New Brunswick as well. It will streamline the process of Ontarians to incorporate federally.
Consider a Joint Online Registration System for cross-provincial registration and proper filling of the required form.
For instance, if you seek to integrate a business in Alberta under Ontario Corporation, first you need to apply for cross-provincial registration and start your business after meeting the below requirements:
- Register in the Alberta telephone directory
- Businesses should appear in local advertisement
- Must have a local representative, office, or warehouse in the province
- Must be approved by the Alberta Business Act
- Having a property in Alberta
· Costing Difference
Federal incorporation is cheaper than provincial by almost half of the cost. The processing fee is nearly the same for both however, the provincial incorporation charged an additional $200.00 then the federal.
Besides, you would be paying an extra $20.00 annual fee in federal incorporation which will be equaled the costs in 10 years. But costs should not be a determining factor while incorporating federally.
· Additional File Returns
Filing returns is always loaded with high-risk and hassle of paperwork in both corporations. They both obtain annual filings, even if the corporation is inactive or smaller in number.
Unlike provincial incorporation, you need to file an extra return (Form 22) if you are incorporated federally, although affordable with the cost but there would be extra paperwork for the process.
Let BG Accounting and Business Solutions work around your filing concerns in a more professional way.
In a provincial corporation, your business can be terminated if you fail to file the annual returns. Moreover, if your company owns a property, and after abolishment, the government will be liable to seize that property as it was treated as personal belonging under a provincial corporation.
In case, there has been a change in the Board of Directors, executives, or physical location, you need to serve a Notice of Change to the state authority.
Time Required to Incorporate?
Due to online accessibility, 2-3 business hours are enough for registration in Ontario. But if we look at federal incorporation, it requires more time because of the paperwork. The authorities need to check the NUANS report for any duplicate names in the field.
- Your business details are more confidential under provincial corporations than federal ones.
- In a federal corporation, your business specifics can be available online such as Address, Annual Filings, Corporate History, Panel Board & more.
- If incorporated federally, businesses can find you on a list of Corporations in Canada.
The incorporation process has many moving parts and we highly recommend you consult with our working professionals before incorporating. Our experts at BG Accounting and Business Solutions can help you determine what type of incorporation is best for your business.