How to incorporate your business in Canada

Incorporating a business in Canada is a straightforward process if approached step by step. Incorporation offers benefits such as limited liability, potential tax advantages, and enhanced credibility. Here’s a comprehensive guide to help you successfully incorporate your business in Canada:

Steps to Incorporate a Business in Canada

1. Choose a Business Name

• Decide on a Name: This is the first and often one of the most exciting steps. Choose a unique name that reflects your brand and business values. Remember, the legal name of your corporation does not have to be your brand name. You also have the option to incorporate as a numbered company (e.g., 12345678 Canada Inc.) and choose a name later.
• Name Search & Approval: Conduct a NUANS (Newly Upgraded Automated Name Search) report to ensure the desired name is not already taken and does not conflict with existing businesses. The report is mandatory if you are incorporating federally or in certain provinces like Ontario and Alberta.

2. Decide Between Federal or Provincial Incorporation

• Federal Incorporation: Allows you to operate under the same name across all provinces and territories. It offers nationwide business name protection but may involve extra filing requirements.
• Provincial Incorporation: Limits the use of your business name to the specific province where you incorporate, which is usually sufficient for businesses operating locally. Popular options include incorporation in Ontario, British Columbia, and Alberta, each with its own set of rules and costs.

3. Choose the Corporate Structure

• Directors: Select one or more directors. At least 25% of the directors must be Canadian residents if you are incorporating federally.
• Share Structure: Determine the types of shares your corporation will issue. You may choose common shares, preferred shares, or a combination. This decision affects voting rights, dividends, and ownership.

4. File Articles of Incorporation

• The Articles of Incorporation is a legal document that formally establishes your corporation. It includes key details such as:
  • The corporation’s name
  • The registered office address
  • The share structure
  • The initial directors
• Filing Methods:
  • Online: You can incorporate online through the Government of Canada’s online filing system for federal incorporation, or through respective provincial websites.
  • In-Person or by Mail: Forms can also be submitted by mail or in person, depending on the jurisdiction.

5. Obtain a Business Number (BN)

• After incorporation, register your business with the Canada Revenue Agency (CRA) to obtain a Business Number (BN). The BN is a unique identifier for your corporation and is required to set up accounts for:
  • Corporate Income Tax
  • Payroll Deductions
  • Goods and Services Tax/Harmonized Sales Tax (GST/HST)

6. Register for Additional Licenses and Permits

• Depending on your business activities and location, you may need additional licenses and permits to operate legally. This may include industry-specific permits, municipal licenses, or provincial registrations.

7. Create Corporate Bylaws

• Corporate bylaws outline the internal rules and procedures for managing your corporation. This document includes details about shareholder meetings, election of directors, and the corporation’s overall governance.

8. Hold an Initial Organizational Meeting

• At this meeting, the initial directors adopt the corporate bylaws, issue shares to shareholders, and appoint officers (e.g., CEO, CFO). Minutes of this meeting should be documented and retained in the corporate records book.

9. Set Up a Corporate Records Book

• The corporate records book is a mandatory item that contains important documents, such as:
  • The Articles of Incorporation
  • Corporate bylaws
  • Minutes of meetings
  • Shareholder information and stock certificates

10. Open a Business Bank Account

• Opening a business bank account is crucial for managing your corporation’s finances. It helps keep your personal and business transactions separate, which is important for tax purposes and legal liability.

Additional Considerations:

• Register for Provincial Sales Tax (PST) if you plan to operate in a province with its own sales tax, such as British Columbia or Saskatchewan.
• Hire a Professional: While incorporating on your own is possible, hiring a lawyer or accountant can be helpful, especially if your business structure is complex.

Costs of Incorporation:

• Federal Incorporation fees are approximately CAD 200 online, with additional costs for NUANS searches and other legal services.
• Provincial Incorporation fees vary by province. For example, Ontario charges CAD 360 for online incorporation.

Pros of Incorporating Your Business in Canada:

• Limited Liability: Protects your personal assets from business debts and liabilities.
• Tax Benefits: Potential tax deductions and lower corporate tax rates.
• Enhanced Credibility: Being a corporation can improve your image with customers and investors.

Incorporating your business in Canada can be a strategic move for protecting your assets and positioning your company for growth. By carefully following these steps, you can ensure that your incorporation process is smooth and compliant with all legal requirements.