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How to Incorporate Your Business: A Guide For Small Business Owners Thumbnail

How to Incorporate Your Business: A Guide For Small Business Owners

Incorporating can provide several benefits to your small business, from limited liability to lower tax rates.1 However, there are several steps one must take to incorporate. Below we’re walking you through the process of incorporating a business in Canada. 

Step #1: Select a Federal or Provincial Corporation

Before starting the incorporation process, you will need to choose either a federal or provincial corporation, and each option comes with different benefits and disadvantages. 

Federal Corporations

Incorporating on a federal level provides several benefits including:1

  • Rights to a unique name across all of Canada. 
  • Businesses that incorporate at a federal level are recognized globally. 
  • Your business address is not locked to one province. 

However, incorporating federally also comes with some disadvantages, such as:2

  • Specific naming requirements.
  • Increased recording and paperwork requirements. 

Provincial Corporations

Incorporating your business at a provincial level restricts your business operations to that province. You may miss out on some benefits of a federal corporation, but free your business from some disadvantages. 

Step #2: Select a Name for Your Corporation

Your corporate name is your business’s legal identity. There are two options for selecting a corporate name:3

  • A word name consisting of letters and symbols.
  • A numbered name selected by the government. 

Incorporating a business with a name also comes with several additional requirements to ensure it is identifiable and distinct. This can add to the challenge of finding a name.4 Once a corporate name has been selected, you will need to reserve it. This process changes depending on your province, be sure to check requirements before moving forward.2

Step #3: Establish Your Articles of Incorporation

There are two general options to establish your articles of incorporation: a basic incorporation or a custom incorporation.3 These act as the structure for your corporation.

A basic incorporation provides:3

  • Pre-determined, amendable articles.
  • A numbered name.
  • Set limitations to share classes.
  • A maximum number of directors.

A custom incorporation provides more flexibility and requires:3

  • The name of your corporation.
  • A share structure, including any transfer restrictions.
  • The number of directors.
  • Any additional restrictions and provisions.

Your articles of incorporation may be written in English, French or a combination of the two. 

Step #4: Create Your First Board of Directors

To be selected as a member of the board of directors, an individual must:5

  • Be 18 or older.
  • Not be legally declared incapable by the laws of any territory or province of Canada or by a court outside of Canada. 
  • Be an individual.
  • Not be bankrupt. 

Once a member meets these requirements, you must also provide their first name, address and residency status.3

Step #5: Set a Registered Office Address

Your registered office is the address where corporate documents will be sent and kept. After incorporation is complete, this address will be made public along with the members of your board of directors.3 

Step #6: Apply for Incorporation

Application and fees may be processed online or via mail, depending on your province.3

Once the process is complete, you will be legally ready to start growing and operating your small business. If you’re considering embarking on this process, work with a trusted financial partner who can help answer any questions.

  1. https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06641.html
  3. https://www.thebalancesmb.com/how-to-incorporate-your-business-in-canada-2948225
  5. https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06642.html
  7. https://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs07448.html#toc-01
  9. https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06643.html#toc-01.01    

Please consult financial, legal, or tax professionals for information specific to your situation. The information and material presented are general, may have changed since the published date shown, and should not be considered financial advice. LetsPlan.ca is published in Canada exclusively for residents of Canadian jurisdictions where our products and services may be legally offered. The services offered within this site are available exclusively through our Canadian advisors. While we often provide original content, Twenty Over Ten initially provided the subject matter for this post. It has since been edited, reviewed and approved by our Privacy and Compliance Officer. Advisors may only conduct business with residents of the province(s) in which they are licensed and registered.