A high-level overview to Incorporating on Goodlawyer for Canadian founders, and links to free and useful resources.
1. What is an Incorporation?
Incorporation is a legal process that involves the creation of an independent legal entity that is recognized by the Canadian government. A corporation has the same rights as a person and is considered a separate legal entity. Corporations are the most common business structure in Canada and for good reason; incorporating your business can reduce your tax burden, limit your personal liability, give your business a strong foundation to build on, and more.
2. Why should I incorporate?
Whether it’s through investors, grants, or financing, incorporating correctly from the outset will give you better access to funding and make you more attractive to partners and investors.
Limit your liability.
Corporations are considered separate legal entities that operate independently from their owners and shareholders. If the company ever gets sued or goes under, your personal assets can be protected.
Reduce your tax burden.
Corporations pay less tax than you do personally. If you’re growing your business, incorporation will allow you to leave more money in the company and out of the hands of the taxman.
If you have to leave your business for any reason (retirement, health concerns, etc.), it can live on without you and carry your legacy into the future.
Protect your name.
Claim dibs on the chosen name of your business and make sure no one else operates with the same or similar name.
3. Pricing and Scope
Goodlawyer offers multiple options for founders looking to incorporate a business in Canada. We've worked with thousands of startups and hundreds of lawyers and designed our Basic Incorporation for $599 in AB, BC, and ON. You can also add our Goodlawyer Pro subscription to Basic Incorporations for added savings.
If your business requires you to deviate from the details set out in our Basic Incorporation or if you would just rather have some help from a professional, you can book a Lawyer Assisted Incorporation for $599 + Government Filing Fees (additional $300-$500, Lawyer Assisted Incorporations typically have a final price between $900 - $1200).
4. Frequently Asked Questions
When should I incorporate?
This is extremely unique to each business and is influenced by many variables. The best way to know if it's time for you to incorporate is by speaking with a lawyer. Book a Goodlawyer Advice Session today!
Should I have a named or numbered corporation?
Having a named corporation can give you some additional name and brand protection, but it isn't always necessary.
Should I incorporate federally or provincially?
If you run an online business or carry on business across several provinces, then you might want to consider federal incorporation. Incorporating federally requires your corporation to register with the federal government and then again in every province where you conduct business. For most provinces, this will require additional fees, although some provinces are free. You will also have to file annual corporate returns for both your federal corporation and your extra-provincial registrations. Overall, federal incorporation is more expensive but comes with greater name protection for your business, as well as wider rights to conduct business across the country.
If you plan to operate your business in a single province, you can just register provincially. This is a more simple and affordable option for many businesses, but limits them geographically and does not protect the name of their business outside their province of registration. That means a company with the exact same name as you can incorporate in another province. You can always incorporate federally later, or add extra-provincial registrations if you expand out of your home province.
What is considered “conducting business” in another province?
Typically, you would need to register for an extra-provincial registration in a province if you have employees, facilities, offices, or other substantial assets in that jurisdiction. Simply making sales of goods or services, or even entering into contracts does not necessarily mean that you need to register in that province. Your lawyer will be able to determine if you require any extra-provincial registrations.
What are the government fees?
How long does an incorporation take?
Basic Incorporations on Goodlawyer take 4-5 business days. Lawyer Assisted Incorporations can vary depending on your needs. Your Good Lawyer will give you an estimated completion date once they know what you need.
What about forming a cooperative, non-profit, or sole proprietorship instead?
There are huge differences between these business structures and corporations. If you’re interested in forming a non-profit, co-op, sole proprietorship, or other non-traditional business structure we recommend booking an Advice Session with a Good Lawyer to figure out what’s best for your business and personal goals.
Are there any disadvantages to incorporating?
While incorporating is generally a good idea for most businesses, it does have some drawbacks. Firstly, it’s expensive to incorporate and the legally required maintenance of your corporation has annual fees. Secondly, corporations must file and pay taxes annually. Finally, incorporating often comes with other legal needs such as drafting Shareholder Agreements.
Where can I learn more about Incorporation?
If you'd like to learn more about incorporation, check out some of our relevant blog posts below: