Should I incorporate federally or provincially in Canada?

eCommerce Companies may incorporate Federally or Provincially. The primary differences between the two methods has to do with how well your company name is protected, where you can “conduct business” and the costs.

Provincial Incorporation

If a business is incorporated provincially, the corporate name is protected within the province. The rules are less strict in terms of uniqueness of the business name and will be accepted if there are no names that match. However, it will not protect your name in different provinces should you choose to expand to different territories in the future.

By registering the business on a provincial level, you may only conduct business from within your registered province and the address of the business must be within the province. Mailing addresses will be limited to the address registered under the business. 

You will also need to file an annual report with the Ontario government to maintain your corporation’s active status.

Selling nationwide with a provincial corporation

For eCommerce sellers the common question is whether products or services can be sold all over Canada with a provincial corporation.

Having a provincial corporation does not limit businesses from selling goods or services in another province. What is meant by conducting business only in the province is related to having an office, employees etc. in the province. 

Therefore, you could be a corporation registered in any province (Ontario, BC etc.) and sell your goods through Amazon, eBay or Shopify all across Canada and USA without any issues. 

Federal Incorporation

A federal incorporation allows you to conduct business using its name in any of the provinces. For e.g. you start off your business in Ontario then want to expand to BC by opening offices and hiring employees there, you can operate under the same name. If you are registered provincially in ON you will have to register a corporation in BC. There is no guarantee that when you go to register in BC, your corporation name is not already taken. 

If you have a corporation registered federally, even if similar names exist in other provinces you could still operate under your own name. A business that registers Federally receives greater name protection compared to their counterpart (Provincial), however, requires stricter name selection. You can use the government website to see if your company name is already registered. Once it is accepted from the Federal government, the corporation name is protected throughout Canada including all provinces and territories. 

Downside with federal corporations revolves around increased cost and work. As A federal Corporation, you are subject to additional annual filings. You will also need to extra-provincially register your corporation for each province that you do business in.

What does this all mean?

At the end of the day if you need name protection of your corporation in the whole of Canada, federal incorporation is a good choice. Especially if you know you will have locations across Canada.

For most sellers the simpler method would be to incorporate provincially, as it is less work and less costly. This does not limit you from doing business in any way. As you grow if you ever want to eventually move to a federal corporation this is always a possibility.

If you require any help, feel free to contact us.