Provincial vs. Federal Incorporation


The following article compares the differences and similarities between federal incorporation and provincial incorporation in Canada.
Name Granting
Federal Incorporation

Federal Name Granting Guidelines are generally stricter than provincial guidelines. Your name will be tested through the Federal Database against names registered all across Canada. Your name might be rejected because it is similar to the name of another Corporation that does not operate anywhere near the area you plan to operate in. There is a higher rejection rate for federal corporate names, which might lead to increased cost and time delay.

Provincial Incorporation

Your corporate name will be tested through the provincial database only. Because of this, there is a lower rejection rate for proposed corporate names, but also a greater chance that you may be approved for a name that is already in use somewhere in Canada. If your corporate name is already in use elsewhere, it may be difficult to expand into new provinces in the future.

Name Protection
Federal Incorporation

The name protection offered by Federal Incorporation is second only to the protection offered by registered trademark. Your corporate name is protected across all of Canada. However, despite this, you may still need to meet other provincial requirements when conducting business in different provinces.

Provincial Incorporation

Your corporate name is only protected in the province of incorporation. If you incorporate provincially, your Corporate Name may be used by other businesses in other provinces, making it difficult to use your corporate name if you should ever expand into other provinces.

Filings
Federal Incorporation

In general, there is more paperwork required for Federal Corporations. In addition to a Corporate Tax Return, you must also file a Corporate Information Return. The yearly filing fee for the Corporate Information Return is between $20 and $40. You will also have to keep up with any and all provincial filings.

Provincial Incorporation

In Ontario, Alberta, and B.C., you must file a Corporate Annual Return. In Ontario you must file an initial Annual Return within 60 days of incorporation. You only need to file papers relating to the structure of the corporation when changes are made.

Director Requirements
Federal Incorporation

At least 25% of Directors must be resident Canadians

Provincial Incorporation

  • In Ontario, at least 25% of Directors must be resident Canadians. In cases where there are only two Directors, only one of the Directors must be a resident Canadian.
  • In Alberta, at least 25% of Directors must be resident Canadians.
  • In B.C., there is no requirement for how many Directors must be resident Canadians.

Registered Office Requirements
Federal Incorporation

Your Registered Office can be located anywhere in Canada.

Provincial Incorporation

Your Registered Office must be located in the province of incorporation.

Prestige
Federal Incorporation

Employees, customers, and business associates might feel that a federally incorporated business is more prestigious than a provincially incorporated business. This may be especially true of international business associates.

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