Ontario businesses have the option to incorporate provincially or federally. While the rights afforded to businesses are similar, this decision is influenced based on where you want the business to operate. Smaller businesses that don’t foresee operating in other provinces tend to incorporate in Ontario. Larger businesses that want their brand recognized across the country and in foreign jurisdictions tend to incorporate federally.

Whether you decide to incorporate provincially or federally, the process involves several requirements that can be difficult to navigate. Seeking legal advice is recommended to ensure your business gets off to the right start and avoid potential obstacles down the road.  

Incorporating in Ontario

Incorporating your business in Ontario means the rights and business activity are limited to within the provincial border, unless an Extra-Provincial Corporate Licence is obtained.

The Ontario government regulates the incorporation of provincial corporations under the Ontario Business Corporations Act (“OBCA”), which requires businesses to file Articles of Incorporation. The incorporation process under the OBCA is typically faster, often completed on the day of filing.

The Articles of Incorporation should include at least the following:

• name of the corporation;
• director(s);
• registered office; and
• the effective date.

 

Incorporating in Canada

Incorporating federally has similar advantages to incorporating provincially, and additionally, it preserves your corporation’s name across Canada. Federal incorporation is regulated under the Canada Business Corporations Act (“CBCA”). An additional requirement under the CBCA is that at least 25% of the directors are resident Canadians. 

Selecting a Business Name

Before filing the Articles of Incorporation, you must first select a business name, or you can opt to operate your business as a numbered entity. If you select a business name, you must conduct a New Upgraded Automated Name Search (“NUANS”). A NUANS search provides a report containing all registered entities and trademarks with a similar name. Under both the OBCA and CBCA, this report is included in your filing of Articles of Incorporation.

Your business name should satisfy three legal requirements:

• A Distinctive Element: this can be a word or a name; it should be unique to your business.
• A Descriptive Element: this describes the business you are engaging in, such as “coffee shop.”
• A Legal Ending: demonstrates your business structure, for example Incorporated, Limited, Inc., or Ltd.

 

For more information on how to incorporate your business, please reach out Momentum Law LLP at +1 (416) 594-0791 or email at info@momentumlaw.ca.