How to setup a corporation in Canada?

1. Determine whether or not you need to incorporate your company.
   People frequently incorporate their businesses without thoroughly examining all of the considerations involved. One of the various legal choices for conducting business is the incorporation of a company. You can run your business as an unincorporated entity or as an incorporated entity. When compared to corporation ownership, unincorporated business ownership, such as a single proprietorship or partnership, involves much fewer responsibilities. A corporation is recognized as a separate legal entity, despite the fact that it provides greater personal liability protection than a non-formally established organization.

Examine your current situation thoroughly before deciding whether or not to incorporate your business. Seek the assistance of a skilled accountant who specializes in both corporate and individual taxation if necessary.

Select whether you want to incorporate at the federal or provincial level. 2. After deciding whether or not to incorporate your firm, you must choose the jurisdiction in which you want it to be incorporated. You can incorporate a firm in Canada at either the federal or provincial level.

A federal incorporation permits you to conduct business under the same name in all of Canada’s territories and provinces. The federal company is regarded as a legal entity in Canada. It is often assumed that, in addition to trademark protection, federal corporations give protection for company names. Federal corporations must undergo a process known as Extra-Provincial Registration in order to conduct business in each province in which they operate. Depending on the province, an extra-provincial tax may be imposed. While Ontario does not collect any fees, Alberta does, which is a substantial difference.

The establishment of provincial corporations is governed by the provisions of the provincial corporate legislation. They are easy to set up, and the process for obtaining a name approved is simple.

A frequent misperception is that running a federal corporation costs more than running a provincial corporation. This, however, is not always the case. In fact, because Ontario does not charge an extra-provincial registration cost, establishing a federal corporation is significantly less expensive than establishing a provincial corporation within the province. In the case of Alberta, there is an extra-provincial expense, making federal corporations more expensive than other jurisdictions.

For example, if you are launching a one-person or small firm and want to operate exclusively in a local area, there may be no need to incorporate nationally in the near future. If your company grows in size, you can always incorporate in another country. If you intend to conduct business on a global scale or in numerous nations, you should seek federal registration.

Businesses are subject to the same tax filing procedures and tax treatment as individuals.

3. Choose and reserve a business name.
   Regardless of where you incorporate your business in Canada, you must conduct a name search to determine whether the corporate name you have chosen is appropriate for the firm. If you want to incorporate your company either federally or in a province like Ontario, you must first do a NUANS search and then submit the resulting NUANS report together with your articles of incorporation to the right authorities.

To incorporate your business in Canada, you must first come up with a name that is distinct from those of your competitors. In contrast to provincial incorporation, the name for federal incorporation must be distinct from any other names in the United States’ larger database of names. Corporations Canada must first obtain federal approval for the company’s name before issuing a certificate of incorporation. In Ontario, provincial corporations have the option of picking and reserving a name. The information will be given even if the name does not exactly match. If your company’s name is confusingly similar to that of another, you may be called to a name hearing if the other party asks it.

Before deciding on a name, conduct a Google search to discover whether any social media handles or domain names are for sale.

You can always choose a numbered corporation, which is assigned a unique number by the company’s registration.

4. Submit the Articles of Incorporation and the first set of returns to the Secretary of State.
   In the vast majority of circumstances, two documents must be produced.

The legal documents that govern the formation of a corporation are known as articles of incorporation.
The first registered office address was established, as well as the site of the first board of directors.
Essentially, the articles of incorporation serve as the corporation’s constitution. Articles of amendment must be filed whenever there is a modification to the articles. Take the time to thoroughly write your articles of incorporation and have them reviewed by a lawyer or Chartered Accountant before submitting them. The government bears the cost of revising the articles. Some of the most important questions to consider are as follows:

It is critical to keep the following elements in mind when writing articles:

This rule, which set a minimum and maximum number of directors, determined the number of directors on a corporation’s board of directors.
The classes of shares and the maximum number of shares available are as follows: There is no limit to the amount of share classes you can have. Consult your company’s tax accountant about this because it may affect capital contributions, dividend distribution, shareholder voting rights, or the allocation of remaining assets upon the company’s dissolution.
Common stock transfer restrictions: This is yet another vital thing to read, especially if you are dealing with multiple classes of shares or various shareholders.
Restriction on conducting business: This is necessary if you wish to limit a corporation’s business activity. A big number of professional corporations normally require it.
The first board of directors, as well as an initial notice of the registration address, are filed with the Secretary of State together with the articles of incorporation. Small business owners frequently make incorrect assumptions about the roles of directors and shareholders. A shareholder can serve on the board of directors, but a director does not have to be a shareholder to serve on the board. In most circumstances, a Canadian director is required on the ground in the country. This need varies by jurisdiction, and some governments do not enforce it at all. For example, 25% of the directors of a federal corporation must be Canadian citizens or permanent residents (or a minimum of one director if the number of directors is less than four).

It is no longer necessary for an Ontario corporation to have a director who is a permanent resident of Canada as of July 5, 2021.

5. Submit Extra-Provincial Activity Registration Forms.
   You must complete extra-provincial registrations if you want to have a presence in numerous provinces and territories. If you solely deliver goods and services to other provinces in your home province, extra-provincial registration is not required. You must, however, if you have a branch office in another province.
6. Apply for a Business Number and Accounts with the Canada Revenue Agency.
   A company is a separate legal entity that must file its own income tax filings. When a corporation is formed in Canada, a unique business identification number is assigned to it. In most cases, the Canada Revenue Agency issues a business number and an income tax account once the corporate register forwards the application to the Canada Revenue Agency.

In addition to the corporation’s income tax account, several program accounts, such as a GST/HST account, payroll account, import/export account, information returns account, or non-resident accounts, are required.

If you manufacture taxable items in a non-participating province, you may be compelled to register for sales tax in that province as well.

7. Create a list of potential operational names.
   In many circumstances, a corporation operates in many industries, and using the same corporate name for all of them would be impractical and inefficient. You may also have chosen a numerical corporation rather than a named one. You may be able to register a business name with the province and use it in conjunction with your operating name, depending on the circumstances. This is connected with the concept of “doing business as” in the United States (DBA). A corporation has the ability to register a “unlimited” number of business names. Provincial regulation governs business names. A name can be used in another province only if it has first been registered in that province.

Any changes to your operational names must be disclosed to the Canada Revenue Agency as well.

If you intend to utilize many operational names, you should think about registering a trademark.

8. Write the company meeting minutes.
   Make a set of corporate minutes for your company! Small businesses frequently perform this step after receiving their certificate of incorporation and CRA business accounts. Corporate minutes must be prepared in compliance with applicable regulations. The minutiae of your firm