Incorporating in Canada: Federal vs Provincial

Before starting Union Code, we researched company registration.

We asked mentors and friends where their companies are registered. Most of our Canadian friends are registered provincially, but no one could explain why. All of our own research revealed that by incorporating federally, we could do business anywhere across Canada and the rest of the world. It was also cheaper than provincial registration. It seemed like an easy decision.

So, that's what we did. A quick NUANS name search and a few online forms to register federally. It was simple.

A few weeks later, while speaking with our lawyer, we found out that all companies need to register provincially in the areas where they do business; otherwise known as extra-provincial registration. In the case of software companies, that's the province where their home office is located. Whoops.

Benefits of federal incorporation

  • More protection for your awesome name; no one else in the country can use it.
  • You can do business anywhere in Canada.
  • Seriously, that is it.

Now for the drawbacks

  • You still need to incorporate provincially.
  • You have to keep your corporation in good standing - $20 every year.
  • You need to file federal corporate tax returns along with your provincial return; more work.

So, Union Code Inc. is now registered as a federal corporation in Canada and extra-provincally in British Columbia. Registering a federal company online costs $200.00 and registering a BC company online costs $351.50. So, we ended up paying an extra $200.00 to get our federal incorporation documentation.

At least we can rest assured that Union Code Inc. is safe... in Canada.

Photo credit Gord McKenna.