Corporations have rights and responsibilities similar to individuals, and offer you limited liability as a business owner—your personal responsibilities are completely separate from your business’. However, in some cases you could still be held legally accountable should you do anything negligent or fraudulent. Corporations are the most complex type of business structure, with regulation and reporting requirements you must follow throughout the life of your business.
Why Choose a Corporation
- Limit your personal liability: Corporations are different from other business structures because shareholders’ liability is limited to the money they’ve paid for shares. They cannot be held personally responsible for any debts or legal trouble the corporation might run into.
- Create a separate legal entity: In Canada, corporations have the same rights and obligations as a natural person. This separate legal status continues until the corporation is dissolved, even if the people that started the business die.
- Greater tax options: Once your business’ revenue reaches a certain point, you will pay less in taxes if you incorporate.
- Raise capital more easily: It is easier to raise capital investments with a corporation because you can sell shares.
See Corporations Canada for more on why you should incorporate your business.
Additional reasons you may want to incorporate:
- If you’re thinking about having business partners or hiring employees
- If you’re making substantial revenue (i.e. more than $50,000)
- If it’s required to get hired for a contract or to go on-site
- If you need a WCB account
- If you’re signing a commercial lease or signing a major contract
- If you’re making or selling a product
- For unlimited existence
Why Avoid a Corporation
Starting a corporation can have some added challenges:
- More expensive to form, organize, and manage: Ongoing administration costs are much higher than other business structures.
- More heavily regulated: You must meet certain government requirements every year to keep your corporation in good standing.
- More detailed record-keeping required: You must keep annual shareholder meeting minutes, a list of directors, a registered office address, and more to be included in your minute book.
Small Business Services Canada has detailed information on corporate business structures and how to set up your business as a corporation.
Setting Up a Corporation
Setting up a corporation can be a very complex and difficult process. Consider hiring a lawyer to help you register and run your corporation. If you decide to incorporate your business without the help of a lawyer, contact an Alberta registry office. They sell do-it-yourself kits that will help you navigate the process of incorporating your business.
Follow these steps to incorporate your business:
Decide if You Will Incorporate Your Business Federally or Provincially
To start a corporation, you must submit an application to either the federal government or the provincial government (not both). In general, you should incorporate federally if you plan to do business in multiple provinces across Canada.
- Allows your business to operate in any province in Canada
- Makes it easier to protect your name across Canada
- Better if you have multiple offices in multiple provinces across Canada (although you still have to extra-provincially register your business in any province you operate in, even after you incorporate federally)
- At least 25% of your business directors must be Canadian residents. If there are fewer than four directors, at least one must be Canadian.
Find out what you need to incorporate your business federally from Corporations Canada.
- Can only operate in the province where incorporated (unless you have extra-provincial registration)
- At least 25% of your business directors must be resident Canadians
- Allows you to save on extra-provincial registration costs if you only operate in Alberta
Find out how to incorporate your business provincially at Service Alberta.
Get a NUANS Report to Ensure Your Corporation Name is Unique
Unlike sole proprietorships and partnerships, corporations must have a unique name. You can choose your own unique corporation name or have a “numbered name” assigned to your business by the government (e.g. “785843 Alberta Inc.,” sometimes called a “numbered company”) when you file your Articles of Incorporation.
If you choose your own name, you must obtain a NUANS (Newly Upgraded Automated Name Search) report from an authorized NUANS search house to prove that your corporation name is unique (for both federal and provincial incorporation).
A NUANS report will reserve your corporation name for 90 days. That means you have to complete the incorporation of your business within 90 days of getting your NUANS report.
Learn how to get a NUANS report from Service Alberta.
Submit Incorporation Documents to the Government to Officially Incorporate Your Business
To officially incorporate your business, you must file three documents:
- Articles of Incorporation: Tells the government how your business is organized, who owns it, and where it’s located.
- Notice of Directors: Defines who is in charge of your corporation.
- Notice of Address: Tells the government where your business can be reached.
For provincial incorporation, submit these documents to an Alberta registry agent. The provincial government will give you a Certificate of Incorporation. Provincial applications can sometimes be processed in one business day.
For federal incorporation,you may submit these documents online or by mail. See the Corporations Canada website for more information on how to incorporate your business federally.
If your federal incorporation application is complete and accepted, Corporations Canada will give you a Certificate of Incorporation.
Filing incorporation papers can be complex and difficult—it will take time and effort to learn about all the steps involved. Alberta Registry Offices sell do-it-yourself kits that can help you with the provincial incorporation process. Or, if you are able to hire a lawyer, he or she can help facilitate the incorporation process and manage this complex process for you.
Register Your Business in Every Province You’ll Be Operating In
“Registering” and “incorporating” your business are two different processes. Once you have your Certificate of Incorporation, you will also have to register your business provincially if:
- You incorporated your business federally: you will have to register your business provincially in every province you will operate in.
- You incorporated your business provincially outside of Alberta: you will have to register your business provincially in Alberta and in any other province you will operate in.
To register your corporation in Alberta, go to the Service Alberta website to find out how to register an extra-provincial corporation. You can register your business at any Alberta registry office.
To register your business in British Columbia or Saskatchewan, see Service Alberta’s guide to the New West Partnership Trade Agreement (NWPTA). This agreement makes it much easier to register your business in British Columbia and Saskatchewan.
To register your business in other provinces, see Small Business Services Canada provincial and territorial business registration information.
Acquire Necessary Municipal, Provincial, and Federal Permits and Licenses
Registering your business isn’t enough—you still have to make sure you have the right permits and licenses before you can start doing business. Many businesses will have to get municipal, provincial, and federal permits or licenses to operate.
See our permits and licenses page to find out what you need. Also make sure you obtain a business number from the federal government and open any other accounts you need.
Keep a Minute Book
A minute book is where corporations keep track of their board meeting minutes and resolutions, shareholder agreements, and more. It must be kept at the corporation’s registered office.
Talk to a lawyer about starting a minute book, or see the Corporations Canada website for more information. You can also purchase do-it-yourself kits that include sample documents that you can easily adopt for your own corporation’s minute book.
Update the Government of Any Changes to Your Address or Directors, and File an Annual Return
Any time something changes in your corporation—a new mailing address, registered office, or directors—you will need to notify the federal or provincial government (depending on which one you incorporated with). When making changes to your corporation, you will be required to pay all necessary fees associated with it.
You must also file an annual return every year to keep the government updated on your corporation’s activities.