This article will give you a brief understanding of the importance of incorporating a business in Canada as well as give you a step-by-step process of how to incorporate. An incorporated business is a legal entity that is separate from its owners and shareholders. Canadian businesses can be incorporated at the federal or at the provincial level – and I’ll go over the details on that further down. There are majorly two types of corporations in Canada;
1) Federal corporation,
2) Provincial corporation.
From the corporate tax point of view, there is no significant difference between the two types of corporations. Both types of corporations are treated equally in terms of corporate tax purposes. Federal corporation is a public figure and some of the company’s information can be seen on the industry Canada website whereas the provincial corporation is more of a private figure. The basic information for such type of corporation is not accessible online. There is a requirement for both types of corporations to prepare Articles of Incorporation that includes;
- Company Name
- Incorporation date
- Directors and residency requirement
- Business activity
- Classes of shares
- Corporate minute book
- Corporation address
- Virtual mailing address
Once you fulfill all the requirements to prepare articles of incorporations and you get the certificate of incorporation, you need to open up a Corporate Bank Account and you should also apply for a Corporate Credit Card. You need to get a Business Number and Corporation Income Tax Account from the Canada Revenue Agency (CRA). If your sales exceeding $30,000, make sure that your also register for an HST number. Corporation’s income is subject to a tax charge so it is recommended to consult a tax consultant and prepare a tax plan for your corporation.
Almost every small business person considers whether or not to incorporate his business at some point. A common scenario is for small businesses to start out as sole proprietorship’s or partnerships and become incorporated at some later date when the business has grown. Plot in a nutshell, there are mainly 04 steps of incorporating a business in Canada as follows;
- Deciding on a business name
- Get a business number
- Decide to incorporate federally or provincially
- Register for GST/HST
Role of GTA Accounting
GTA Accounting can help you in the process of incorporating a business in Canada and can also facilitate you in preparing relevant documents to acquire a certificate of incorporation. Please feel free to contact us for a free consultation.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.