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Federal or Provincial Incorporation-Which One Is for You?

Federal or Provincial? Which one is for you? Both incorporations are efficacious and can overtake your business possessions.

The client will choose based on their business exposure. If the business operates within a specific area, they should register under the Ontario Business Corporation Act.

Federal incorporation is the best choice for you if you have clients or customers from other countries. This is according to the Canada Business Corporation Act.

Running a business alone or as a corporation is challenging. I recommend hiring a law firm like BG Accounting and Business Solutions. This will help improve business results.

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

Canada Corporations Business Act (CBCA) deals with federal incorporations, while Ontario Business Corporations Act (OBCA) handles regional incorporations.

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 use the same business name in Canada, even if another company in a province has a similar name.

You must propose a unique name for your company. The authority will check if it is not too similar to any existing names.

If you incorporate provincially, you can’t safeguard your business name because anyone in the state or country can use it.

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.

If your company incorporates federally in Ontario, you can also register in Manitoba, Alberta, or New Brunswick. 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.

To integrate a business in Alberta under Ontario Corporation, you need to apply for cross-provincial registration. Additionally, you must meet certain requirements before starting your business.

  • Register in the Alberta telephone directory
  • Businesses should appear in local advertisement
  • Must have a local representative, office, or warehouse in the province
  • The Alberta Business Act must approve it.
  • 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.

Additionally, you will incur a $20.00 yearly charge for federal incorporation, which will amount to the same expenses over a decade. But costs should not be a determining factor while incorporating federally.

· Additional File Returns

Both corporations always face high-risk and hassle of paperwork when filing returns. They both obtain annual filings, even if the corporation is inactive or smaller in number.

If you incorporate federally, you must file an additional return (Form 22). It may be affordable, but there will be more paperwork involved in the process.

Let BG Accounting and Business Solutions work around your filing concerns in a more professional way.

If you fail to file the annual returns, the provincial corporation can terminate your business. If your company owns a property, the government can take it away after abolishment. This occurs because the provincial corporation considers the property as personal property.

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.

Key Considerations:

  • 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.