Looking to register your business as Incorporation, Joint ventures, Partnership, and Sole proprietorship, choose the best type of business registration for your company or business.
Incorporation is a distinct business types from sole proprietorship and partnership types business. Incorporation is the same as corporation and has a distinct legal entity separate from the shareholders or owners. Companies and business can be registered under the federal or provincial jurisdiction in Canada .Incorporating a business has benefits like tax deduction and liability protection and other benefits which can help you grow your business. A incorporation cannot be held liable for any of the losses or liabilities of the shareholders or owners.
Other benefits of being incorporated
- Transferability of the ownership
- Limited liability
- Continuous existence
- Tax deductions
- Any number of owners
- Ability to raise capital
Steps for incorporating a business
- CORPORATE NAME
Selecting a perfect corporate name is a crucial part of incorporating a company. To find the perfect name for you business that shows the nature of the business and has a unique identity, as the corporate name will represent you, your company and the nature of you business.
- COMPLETING ARTICLES OF INCORPORATION
For incorporating the business the company needs to be filed with the articles of incorporation with the provincial or federal government agencies. Before the company can be register it has come to a decision on
- Where to place the registered office?
- What type of shares can be issued by the company?
- Number of shares to be issued?
- Number of directors to be appointed?
- Restrictions and approvals for the types of activities conducted by the company
- Restriction of the share transferability
Jurisdiction Director Residency Requirement
- Federal (Canada) 25% resident Canadian Directors Required
- Alberta 25% resident Canadian Directors Required
- Manitoba 25% resident Canadian Directors Required
- Newfoundland 25% resident Canadian Directors Required
- Ontario 25% resident Canadian Directors Required
- Saskatchewan 25% resident Canadian Directors Required
Provinces Not Requiring Canadian Directors
- British Columbia No Canadian Directors Required
- New Brunswick No Canadian Directors Required
- Nova Scotia No Canadian Directors Required
- Prince Edward Island No Canadian Directors Required
- Quebec No Canadian Directors Required
Once all the above criteria is fulfilled the competent incorporator can has to approve the copies of the article of incorporation and the supporting documents.
- FEDERAL OR PROVINCIAL JURISDICTION
- Choose to incorporate in the federal or provincial jurisdiction; with the federal jurisdiction the incorporator can commence a business anywhere in the federal and provisional jurisdiction however it will be subjected to the registration requirements put by the government of provisional territory.
- EXTRA PROVINCIAL
- If the company is registered with provisional territory the registration process for provincially registered corporations is very similar to the provincial registration process for federal corporations; however, it differs in one important respect: Name Approval.
- GETTING A GST/HST
Getting a GST /HST account to get tax benefits from the government
Other option of the business formation
Partnership is a business type which is carried by two partners with a common goal. There are two types of partnership business in Canada general and limited liability partnership, the most popular type of partnership business is limited liability partnership as it provides combined tax benefits. Limited liability gives you profit sharing but removes you from the management of the business.
Joint ventures are enterprises where two or more entities enter into a specific project with an achievable objective or a set time frame. Joint venture parties typically agree to share investments and resources as well as income and expenses in a specific manner. Unlike partnerships, joint ventures are not recognized as an entity under Canadian income tax legislation. Rather, each joint venture party treats its share of investment, income and expenses as being directly earned or incurred by the co-ventures
Sole proprietorship is one of the simple and easiest way to setup a business the sole owner has the sole owner has the control over the business, income, risk, tax returns etc however, it is bound by the major disadvantage of unlimited personal liability