What are the benefits of incorporation in Canada?
If you are considering starting a new business in Canada or already an owner of an established business, there are important advantages to be gained from incorporation. Incorporating creates a new and separate legal entity for your business, shielding your personal assets and providing a more formal business structure. Your new corporation will have the same rights and obligations under Canadian law, and will be seen as a separate, legal entity just like it would be in the United States. This means the entity can acquire assets, obtain loans, enter into contracts, sue or be sued, and even be found guilty of committing a crime. Your corporation's money and other assets belong to the corporation, separated from the shareholders and/or owners of the business.
How does forming a corporation in Canada protect my personal assets?
Incorporation limits the liability of the corporation's shareholders to the amount of their investment. If under unfortunate circumstances your business should declare bankruptcy, the shareholders of the business don't lose any more than their investment. The shareholders cannot be sued by creditors for repayment of the business' debts.
Who does a Canadian corporation pay taxes to?
Each Canadian province has its own statutes governing corporations operating within their borders, and companies that choose to form a corporation in a specific province must only do business in that province. Canadian corporations will have to pay the corporate tax rate set by the province and federal government. Anyone who derives an income from a permanent Canadian fixture must also pay Canadian income tax. Americans that act as an officer, director, or own shares in a Canadian corporation must fill out Form 5471 and attach it to their U.S. income tax return.
If your corporation earns more than $30,000 a year, you will have to register for a GST/HST Account with the Canada Revenue Agency.
Since every business has unique circumstances, the best way to find out if incorporation is right for you is to consult with a lawyer or an accountant to assess the potential benefits.
What is the process of incorporating a business in Canada
Incorporating in Canada is largely just as straightforward as it is in the United States. First, you decide if you will create a provincial or federal corporation. We already explored provincial corporations, where the corporation formed in a specific province must only do business there. Forming a corporation at a federal level means you can do business in any province. It also affords your business protection from having your company name used by another corporation in a different province, although we do recommend filing a trademark to retain the full rights to the mark.
Once you have decided whether to incorporate at a provincial or federal level, you will need to visit the website of the department that handles incorporations in your chosen province. Some of these provinces may include Alberta, British Columbia, Ontario, and Quebec, among others. For those that chose a federal level, they must visit the Corporations Canada website.
Then, conduct a name search and reservation for your business name through the provincial or federal website you decide to use. Once you have the name set, you may file your Articles of Incorporation and name a registered agent that can accept services of process on the corporation's behalf. Remember that if you choose to incorporate at the province level, every province comes with its own set of requirements. Research their laws accordingly to make sure you do not forget anything crucial for your business.
How are Canadian corporations regulated?
Canadian corporations adhere to a 'comply-or-explain' system where they explain their reasons for non-compliance with company laws in their annual report. This allows many Canadian corporations the ability to define their own growth and development strategies, so long as they are explained to shareholders first.
Why choose MyCorporation® to help you start your business?
Let the business filing experts at MyCorporation save you time, hassle, and money to incorporate your business.
- We make incorporating a business affordable.
Our incorporation services start at just $89 (plus required government fees). Lawyers charge, on an average, over $200 per hour. With our document filing services, you know exactly what you need, what you are getting and how much it all costs from the very beginning.
- We take the bureaucracy out of incorporating.
You could file everything yourself, but when you consider the time needed to file, administer and maintain all the documents necessary to keep your business running legitimately, why would you? MyCorporation offers you serious savings when it comes to your time and resources.
- Help is a phone call away.
Call one of our business filing experts to walk you through the incorporation process. Or, simply answer our questionnaire online that walks you through the process step-by-step, and one of our experts will contact you to confirm and track your order. We are an online service, backed by real people.