When you want to incorporate a company, you want to understand which one should you do – an Ontario Corporation or a Federal one. I would like to explain this from perspective of a small business.
Federal Incorporation
- You can have principal place of business in any province.
- Your corporation name is protected across Canada.
- Cost of Incorporation, Name Search and changes is comparatively lower.
- Its bit hard to get the name approved as Canada wide database is searched and there are more chances of finding a similar name.
- There is a small annual filing fees.
- Your principal place of business can be in Ontario only. So this is more suitable if you have no plans to move to any other province.
- Name of your corporation is protected in Ontario only.
- Cost : It’s bit expensive to incorporate as Government fee is higher. It’s also costly to make changes, such as, address change, director change, etc.
- There is no annual filing fees if done with corporate tax return or in person.
- Generally both kinds of corporations have same tax implications in terms of allowable expenses, small business deduction and taxability of income. Tax rates vary slightly across provinces.
When you only need Ontario/Provincial Corporation
Sometimes, you don’t have any choice but do Ontario incorporation only. This is the case for regulated professionals, such as, Physicians, Dentists, Veterinarians, Accountants, Lawyers, Physiotherapists, etc. The reason is they are Provincially regularly and they cannot practice outside that province. So they have to do provincial incorporation.
