There are also a few disadvantages of incorporating your business, which include: 

·        Start up funding – the fees and expenses associated with incorporating your company may be expensive when compared to other types of business structures such as sole proprietorships and partnerships.

·        Corporate record maintenance – you must maintain corporate records as well as hold meetings, elect directors and give the shareholders of the company information.

·        Double taxation – the income that is made by a corporation is taxed twice – at the corporate level and at the shareholder level. The corporation pays taxes on the income and then the shareholders must also pay taxes on the dividends and profits they received from the corporation. 

Where to incorporate your business 

There are two different places you can incorporate your business – either federally under the federal laws of Canada or provincially using the provincial laws of any of the provinces. Of course there are advantages and disadvantages to both choices and deciding where to incorporate your business largely depends on your answers to the following questions: 

1.      Will I be doing business in more than one province?

2.      What percentage of the directors will be residents of Canada?

3.      Do I want to have two annual corporate reports, one for each federal and provincial?

4.      Do I want to save money now for incorporation, even though it could cost me more in the long run? 

If you will only be doing business in one of the provinces, then choosing the provincial incorporation is best suited to your needs or under the federal corporation if you choose. A federal corporation is entitled to do business anywhere in Canada and only needs to register in each province where it does business. There are usually registration fees for each of the provinces, with the exception of Ontario and Prince Edward Island. 

Federal corporation has more stringent criteria to use a business name as the corporation’s legal name. The name will be looked at by federal corporations examiners and there are many factors that are taken in to account. When the name for your corporation is approved it does provide some legal protection, which is only less than trademarks. Provinces will grant nearly any name to a company unless it is exactly identical to another, and offer very little protection of use for names of companies. Federal corporations provide Canada-wide protection of name. 

Costs of Incorporation 

Perhaps the biggest deciding factor for businesses who are considering incorporating is the cost of the process. Government fees are not the same, so the jurisdiction of your incorporation will be the criteria for fees. 

The current government incorporation fees are as follows by jurisdiction: 

Jurisdiction  Incorporation fees

Federal  $200

Alberta  $225

British Columbia  $352

Manitoba  $300

New Brunswick  $260

Newfoundland  $250

Nova Scotia   $390

Ontario  $360

Prince Edward Island  $260

Quebec  $300

Saskatchewan  $265 

If you are incorporating federally you must register provincially as well. The fees for registering in each province are as follows and are in addition to the $200 federal incorporation fee: 

Province  Registration Fee

Alberta  $175

British Columbia  $375 plus name search of $39

Manitoba  $300 plus name search of $49

New Brunswick  $250

Newfoundland  $210

Nova Scotia   $220

Northwest Territories  $300

Ontario  $0

Prince Edward Island  not applicable

Quebec  $212

Saskatchewan  $320 plus name search $60

Yukon Territory  $335 

As you can see from the table above, it is most expensive to incorporate federally with the exception of Ontario where there is no registration fee. It is, actually, less expensive to incorporate federally than provincially in Ontario. For federal corporations you must file two annual report filings where you would only require one for provincial corporations.