The time has come for you to incorporate a new company. One of the first considerations is which jurisdiction should the company be incorporated in…provincially or federally?
The main advantage with a federal incorporation revolves around corporate naming rights.
Incorporating federally allows you to conduct business across Canada using the same corporate name.
The same cannot be said for provincial incorporations. If you were to establish an Alberta corporation, your corporate name protection is limited to operations within Alberta.
Additionally, there are those that consider a federal corporation more prestigious than its provincial counterpart and where status is important (possibly when dealing at an international level), often a federal corporation is preferred for that reason alone.
So why would you choose to incorporate provincially?
One reason may be that you are looking to incorporate a Professional Corporation or an Unlimited Liability Corporation. These two special purpose entities are not offered at the federal level.
Secondly, depending on the nature of your business, often Alberta corporations are less work and less expensive to operate.
Reason being, if you choose to incorporate federally, you must also extra-provincially register your business in any province or territory where you carry on business. This adds an extra layer of cost.
By way of example, let’s suppose you incorporate federally for a business you intend to operate in Alberta. You would have to pay the fees to incorporate and maintain your federal corporation AND pay fees associated with extra-provincially registering your federal corporation to carry on business in Alberta.
By simply incorporating in Alberta, you only have the costs of incorporating and maintaining your corporation. There is no need to “extra-provincially” register your Alberta corporation in order to carry on business in Alberta.
Unless you intend to operate internationally or you are trying to secure nation-wide name protection, an Alberta corporation may be all you need, especially if you intend to only operate in Alberta.
If your business expands to other provinces, you will always be able to extra-provincially register your Alberta corporation in those provinces.
If you have questions or would like to discuss which jurisdiction is right for your company, reach out to us at [email protected].