A business in Ontario can choose to incorporate federally or provincially. This article compares the difference between federal incorporation and Ontario incorporation.
Before we go into our subject, one very important thing you should know is you may sell your products and services to individuals and businesses located in any province of Canada or overseas, no matter you incorporate federally or provincially.
The following information should be taken into account before you decide whether federal incorporation or Ontario incorporation is suitable for your business.
1. Corporate Name
Federal incorporation: Federal Name Granting Guidelines are very strict. Your name is tested through the Federal Database against names registered all across Canada. The name decision is made by government examiners. Finding an available name is more difficult.
Ontario incorporation: Your name only needs to be available under Ontario laws. It is less likely being rejected. However, there is a greater chance that you may be approved for a name that is already in use in other provinces in Canada. It is more difficult to expand outside Ontario if your corporate name is already in use elsewhere.
2. Name Protection
Federal incorporation: Your corporate name is protected across Canada. You can enjoy a very strong national protection that is second only to the protection offered by registered trademark. Despite this, you may still need to meet provincial requirements when you conduct business in different provinces.
Ontario incorporation: You corporate name is only protected in Ontario. It is more difficult to expand into other provinces especially if your corporate name is used by other businesses in other provinces.
3. Incorporation Processing Time
Federal incorporation: Longer processing time. It takes 1 - 2 days. And higher rejection rate for federal corporate names might lead to time delay.
Ontario incorporation: Faster incorporation turnaround time. Real time incorporation is available.
4. Incorporation fee
Federal incorporation: lower government incorporation fee.
Ontario incorporation: higher government incorporation fee.
5. Filings
Federal incorporation: You have to file a Corporate Information Return yearly. And there is a government fee associated with the annual filing.
Ontario incorporation: There is no government fee for Form 1 filings such as Initial Return, Notice of Change, and Annual Return.
