As a business lawyer and an immigration lawyer, we do a significant amount of incorporations for businesses across Canada. Have you been doing business lately without incorporating? This is how most small business owners start: they register a business name, apply for a Master Business License and start working on getting their names out there to start selling and doing business. Entrepreneurs are resourceful, and that also applies to what legal steps they favor taking.
However, once your business begins to generate a certain threshold of revenue, it is important to start considering an incorporation. Here are a few reasons why:
The reason entrepreneurs consider incorporating after generating a certain level of revenue is that the incorporation process costs more than other simpler business structures, they also require annual filings with the Government and are strictly regulated by it.
The most question that business owners ask themselves is whether to incorporate provincially or federally. A Federal incorporation has different rules and a different law to abide by than a Provincial incorporation. It is therefore necessary to understand both before making such a decision. Federal incorporations are governed by the Canada Business Corporations Act (R.S.C., 1985, c. C-44) (the “CBCA”). Provincial incorporations are governed by Ontario’s Business Corporations Act, R.S.O. 1990, c. B.16 (the “OBCA”).
Given how each business is unique as it depends on the specific industry, the business owner’s short and long term goals, revenue as well as the business history, it is best to seek a legal recommendation from a business lawyer regarding a Provincial or Federal Incorporation. You can book an appointment with a Business Lawyer, Rana Charif by clicking here.
For general information, the following are the main differences.
Provincial Incorporation (In Ontario)
The Canadian government provides some more insight on Federal Incorporations.
September 7, 2021