Starting a Company In Canada: Federal vs. Provincial Incorporation

DISCLAIMER

This information is intended for business owners in Canada and serves as general guidance only. Always consult with a qualified advisor before making any legal decision. 

In this article, we’ll cover the following topics:

• Federal versus provincial incorporation:

  • Filing fees

  • Name protection

  • Registration

So, you’ve decided to incorporate your business. Now you need to decide where to incorporate – in a certain Canadian province, or at the federal level.

There are three things to keep in mind when considering federal incorporation versus provincial incorporation. 

Filing Fees

The cost of filing federally is $200, plus the name reservation (NUANS, which is $13.80). At the provincial level, the filing cost varies by province. In British Columbia, for example, provincial incorporation currently costs $351.50, plus the name reservation (either $31.50 to $131.50 depending on the turnaround time you require). 

Limited Name Protection

If you file federally, your corporation’s name will be protected at the federal level in the sense that another entity cannot incorporate federally under the same or identical name. If you register at the provincial level, the name will only be protected in that province.

A pre-existing federal incorporation however doesn’t prohibit another entity from incorporating under the same name in BC however - for example, if a corporation called ‘MOE’S BARBERSHOP INC.’ exists federally, the BC registrar is not going to take note of the existence of this federal entity before approving a BC name reservation application for ‘MOE’S BARBERSHOP INC.’. 

Registration

Whatever province you do business in, you need to be registered to do business there, and each provincial registration comes with a fee. In British Columbia, the fee to be extra-provincially registered for federal corporations and incorporations from other provinces is $351.50 (plus you’ll need to reserve the name again); in Ontario, it’s free if you are federally incorporated. If you incorporate in BC, you do not need to pay a registration fee (you’re automatically registered). Even if you’re federally registered, you’ll need to register in each province where you’re doing business. The same goes for companies registered on the provincial level with respect to provinces other than the one they’re incorporated in.

Conclusion

If you’re carrying on business in British Columbia, it’s more cost-efficient to incorporate provincially. You’ll only be met with the filing fees for incorporation and the name reservation. If you incorporate federally and do business in BC, you’ll need to pay for the federal incorporation filing fees ($200), the federal NUANS report ($13.80),  the name reservation fee in BC ($131.50) and the extra-provincial registration fee ($351.50).

If you have a unique situation where the requirement of protecting your name at the federal level is important to you, then going federal may be the better choice. Additionally if your business is truly national and you are carrying on business in multiple provinces (e.g. have employees, substantial sales or physical locations in a given province), then the difference in fees between BC and federal incorporation may be nominal. 

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