DIFFERENCE BETWEEN FEDERAL CORPORATION AND PROVINCIAL CORPORATION
1. Name Protection Rights for your business
In case of Federal Corporation, Name Approval Standards are very high. So, if any name is got approved under CBCA Act, it will be protected across Canada whereas in case of provincial corporation, name is having protection rights only in a particular province due to less strict name criteria. In that case, there are high chances that similar name can exist in more than one province. However, if you want to limit your business operation to only one province then provincial incorporation is the best choice for you otherwise opting a federal corporation is good to run business in the whole Canada.
2. Incorporation Costs
Federal Incorporation requires to register a business in a particular province along with Federal registration. That will incur extra cost and documentation with more time involved. Your decision to incorporate Federally or Provincially will affect the time and cost involved in incorporation. The process for name approval will take longer under federal incorporation and if time is important, Provincial corporation is best choice. Federal Corporation needs at least 25% directors to be Canadian Resident whereas provincial corporation allows all directors to be non- Resident. Also, Annual Filing is must in Federal Corporation but there is no such requirement in provincial corporation.
3. Jurisdiction of operation
Federal Business can be run anywhere in Canada for Federal Corporation without having thinking of location of office in a particular province. But provincial incorporation has to establish office in a particular province. Federal incorporation in Canada is governed by Corporations Canada, and offers generally wider protections. It allows you to conduct business in all provinces and territories.
4. Business Recognition
It is easy to get Worldwide Recognition for your business in case of Federal Corporation.
5. Easy Online Submission
It is easy to operate business through Online access of Corporations Canada Website for sending documents, pay fees, and receive documents & acknowledgments without any hassle of physical submission in Federal Incorporation
Summary of Major differences between federal and provincial incorporation:
- Federal Corporation can operate business in any part of country but provincial corporation can access only the province which have been registered during incorporation process.
- Federal incorporation protects your business name across Canada whereas Provincial incorporation have name rights protection in that particular province only.
- Federal incorporation is more costly and time taking than provincial incorporation as it involves multiple incorporation along with Annual Filing Reporting.
- Provincial Incorporation is much easier to complete as it is handled provincially without intervention of Federal Compliances.
Decision to incorporate federally or provincially will largely depend on the type of your business. In case of small business operating in local provincial limits without having any national client or vendor, it may make more sense to incorporate within your province.
But if Business is conducted across Canada with national wide customers and suppliers and one wants to explore more than one province, federal incorporation can be selected.
When you incorporate federally, you will receive a business number from the Canadian Revenue Agency. This will save you an extra step needed in provincial incorporation.