Federal incorporation offers many benefits, including:
- You got the right to use your name across Canada
- Liability of Shareholders is limited to the amount of their investment
- Federal Law offers lower corporate tax rates
- When a corporation is incorporated Federally under the Canada Business Corporations Act (CBCA), you can have better access to capital and grants in Canada
Procedure to incorporate a Corporation under Federal Government in Canada
Following are the major steps to incorporate a Corporation under Federal law:
- Whatever you decided as a business object for your corporation that needs to be described as your business activities while filing incorporation application
- After that you can plan on how you want to name your corporation. Every incorporated business must have a name that legally identifies it. Your corporation can have either a corporate:
- word name, made up of letters and symbols; or
- numbered name, for example, 12345678 Canada Inc.
A numbered name corporation can use a different name to conduct business. With a word name, you have the legal right to use it across Canada once Corporations Canada approved your name.
- A NUANS report– In case a federal corporation is choosing word name, it is essential to send the name for pre-approval to the federal government. The name has to be quite unique to get easily approved. A NUANS report conducted in the last 90 days will do the work. If the name gets rejected – a new Nuans report will be needed. A Nuans report is a list of existing corporate and business names, as well as trademarks, that are similar to the one being proposed. A Nuans report helps avoid choosing a name that is already in use.
- Create your articles of incorporation– This step establishes the structure of your corporation. Once name approved, you may file your Articles of Incorporation and name a registered agent that can accept services of process on the corporation’s behalf. If you are incorporating a small, private business, consider choosing standard articles of incorporation (having an option to amend later) the corporation can issue an unlimited number of common shares and there are no restrictions on the business activity with one or two classes of shares and a maximum of 10 directors.
Alternatively, you can customize your articles of incorporation to include your corporate name, your share structure and any restrictions on share transfers, your corporation’s number of directors, any restrictions you might want to set for your business or business activities and any other provisions. the corporation must receive from the shareholders the value amount listed for the issued shares. The shareholder’s information is not submitted to the government during the incorporation process (only details of directors). The shareholders names and amount of capital is only part of the internal agreement of each corporation. English or French language can be used alone or simultaneously in the articles.
- Establish the initial registered office address– Every incorporated business must have a registered office address. The registered office is where you must keep your corporate records and where official documents will be served on the corporation. It has to be a physical address in Canada where any sent documents can be easily received. Because once you provided the address, documents will be assumed to have been received by the corporation.
- First board of directors– The names and addresses of each director (a minimum of 1 is required) who will be on your corporation’s board of directors. Also indicate whether or not they are a resident Canadian. A minimum of 25% of these must be Canadian residents. You must check whether your directors meet the eligibility criteria.
- Corporation Number– Corporations Canada assigns corporation numbers a 8-digitnumber to identify individual corporations. You need your corporation number to carry out transactions on the Online Filing Centre and in all correspondence with them.
- Corporation Key– Your corporation key (having 8-digit number) is issued by CRA and works as a password. It allows you to carry out online transactions that do not require a fee. For example, For changes in address or directors online. You must not share your corporation key with any unauthorized person.
- Business Number– The business number (BN) is a 9-digitaccount number that identifies your business to federal, provincial, and municipal governments. The BN is issued by the Canada Revenue Agency (CRA). A business entity is assigned only one BN regardless of the number of business locations or businesses that are owned by that business entity. The Business Number simplifies business-to-government interaction, as business owners will eventually be recognized across various government program areas by their business number.
- To provide greater transparency over who owns and controls your corporation, you have to maintain a register of individuals (called ISC) with significant control over you corporation. The ISC Register helps law enforcement agencies expose activities like money laundering and tax evasion
- To register with Federal corporation income tax or for other federal tax accounts, such as GST/HST, payroll, import/export if applicable.
- Extra-provincial corporation registration– If someone choose to form a corporation under federal law then it is mandatory to register in each province and territory in which it will conduct business. A separate provincial corporation number is also issued under provincial law. For example, If business exists in Ontario, you will also need to do an extra-provincial registration of your federal corporation in Ontario and every time you need to update an address change or other -you will need to do it with both governments.
Company Incorporation in Ontario Canada – Click Here
- You may also need permits and licences from the federal, provincial/territorial and municipal governments.
- Federal corporations must pay an annual renewal fee to be in good standing.
Annual return filing period– Every year, you must file an annual return with Corporations Canada. The annual return is not your income tax return; it is a corporate law requirement.
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