Get a Simple Breakdown of Each Process
If the thought of getting your business registered or incorporated feels overwhelming, you’re not alone. Keep reading to discover the ins and outs of registration and incorporation, get a better idea of which one may be right for your business and explore tips to make the process easier.
Prefer to just get started? Register or incorporate your business in minutes with Ownr.
What are Registration and Incorporation?
Ready to bring your business idea to life? You’ll want to register or incorporate your business.
- Registration is a legal process that establishes your business in every province or territory where you plan to operate. It allows you to file taxes as a business, which could help to lower your tax bill and provide other benefits—more on that below.
- Incorporation is a legal process that lets you establish your business as a separate legal entity with the federal government. Only corporations are required to incorporate, although other business structures may choose to do so as well.
You have to register your business before incorporating it—but you don’t have to incorporate right away. You can wait until your business grows and/or you’re ready to start selling shares. Incorporating is more costly and can be more time-consuming than registering but the additional cost may be worth it for your business.
Benefits of Registering or Incorporating
Each can help you in a few different ways.
Sole proprietorship and partnerships
|Completed at federal or provincial level?
|Provides tax advantages
If you expect your revenue to top $30,000 a year, you will need to register for a GST/HST account, which requires you to have registered your business
Registering early for GST/HST allows you to recover all the GST/ HST amounts you pay for business purposes
In Canada, the tax rate on corporations is lower than the tax rate for individuals
|Eligible to open a business account
|Provides legal advantages
Unlimited liability—debtors can go after your personal assets
Limited liability—separates your personal and business obligations
|Helps with growth
Registering allows you to hire employees, which you may need to do as your business grows
If you want to sell shares to investors or raise capital, you’ll need to be incorporated
|Helps with business continuity
No, a registered business cannot be transferred to another person
You can transfer a corporation among individuals by selling or transferring shares
Corporations are not limited to the lifespan of its owners and can exist indefinitely
How to Register Your Business
The process for registering your business depends on your business structure and location. However, some steps apply to all businesses. Follow these steps to get a business number (BN)—or NEQ if you’re in Quebec:
Gather the essential information:
- Official address for your business
- A list of provinces and territories you plan to operate in
- Your proposed business name, which should be unique and reflect the product or service you plan to offer—see tips on how to name your business.
- Your business structure (sole proprietorship, partnership, co-op or corporation)
Do a business name search to make sure your business name is unique. In some provinces, you may need to register your business name before registering your business online or by mail.
Register your business:
- If you live in Ontario, Quebec, Alberta or British Columbia, you can use Ownr to register a sole proprietorship in minutes. (Ownr is not able to register partnerships at this time.)
- If you live in another province or territory—or you need to register a partnership—please visit Canada.ca to see how to register your sole proprietorship or partnership.
Want to learn more about registering a business? Check out Ownr for more resources.
How to Incorporate Your Business
Before starting the incorporation process, it’s important to note that you can incorporate at the federal or provincial level. While both allow you to operate your company in any province and around the world, there are a couple of differences to consider:
- Incorporating at the federal level offers more name protection than at the provincial level. Your business name will be registered throughout Canada, versus in a single province.
- Federal corporations require that at least 25% of the directors of your corporation be resident Canadians. There are no Canada director residency requirements for Alberta, British Columbia, Ontario and several other provinces and territories. Keep in mind that federal corporations may take extra work to register and can cost more money.
As for the process, it’s very similar for both provincial and federal incorporation:
Choose your business name. If you don’t have a name in mind, you can incorporate a numbered company and choose a name later. Not a public-facing business? You can operate without a legal name. Keep in mind that your legal business name doesn’t have to be the same as your brand name.
Tip: Business names that stand out usually include a distinctive element, a descriptive element and a legal ending. In fact, it’s required in some provinces to include both. Check out an example for Rhino Ice Cream Inc.:
a descriptive element
a legal ending
Create your Articles of Incorporation. Articles of Incorporation are legal documents submitted to the Provincial, Territorial or Federal governments within Canada to establish your business as a legal entity—they also help set out your corporation’s purpose and regulations.
Typically, Articles of Incorporation include things like your business name, address, your board of directors (and their addresses), share structure, restrictions and more.
File your Articles of Incorporation with the Provincial or Federal government and pay the fee.
Make sure all your company formation documents are signed to avoid risks like having no owners in your business or the inability to have investors. While these issues can be fixed later, it could cost you more money.
Want to learn more about incorporating a business? Check out Ownr for more resources.
This information is not to be taken as legal advice and RBC is not responsible for any actions taken.