In Canada, entrepreneurs have the option of incorporating a company federally with the Government of Canada, or provincially with the provincial government where their head office is located.
Legally, there are only minor differences between federal and provincial corporations. For tax purposes, there are rarely any differences between the two.
Unlike the United States, where companies make strategic legal decisions about their state of incorporation, Canada does not offer a wide-range of options among the provincial or the federal governments.
Below is a list of the key differences between federal and provincial corporations:
• Incorporated pursuant to the Canada Business Corporations Act
• Corporate name is registered and reserved throughout Canada
• Slightly more ongoing paperwork than provincial corporations (certain documents may also need to be filed federally and provincially)
• Costs $20/year to maintain the company and file the Annual Return
• In Ontario, government registration fees are approximately $175 less than provincial fees
• Incorporated pursuant to a provincial Business Corporations Act
• Slightly less ongoing paperwork (no need to file corporate documents with the federal government)
• Corporate name is only registered and reserved in one province (unless extra registrations are obtained)
• Annual Fees depend upon the province (but free for provincial companies in Ontario)
For more details on incorporating federally versus provincially, see our Jurisdiction of Incorporation article.