Register a company in Canada

Federal or provincial is the only decision that is hard to reverse. Everything else is paperwork.

Sole proprietor, partnership or corporation

A sole proprietorship is you. No legal separation, business income on your personal return, and you are personally liable for everything. Cheapest to start and perfectly respectable for a service business with no staff and no debt.

A corporation is a separate legal person. It limits liability, files its own return, and gives access to the small business deduction. It also costs money every year whether or not it trades.

Federal or provincial

Federal incorporation (under the CBCA, through Corporations Canada) gives name protection across the country and lets you operate in any province — though you still register extra-provincially wherever you actually do business, so the paperwork does not disappear.

Provincial incorporation is usually cheaper and simpler, and is the right answer if you trade in one province and expect to keep doing so. Name protection stops at the provincial line.

The honest rule: incorporate provincially unless you have a specific reason not to. The federal route is for a name you need to defend nationally or a business already operating across provinces.

What you will need either way

A name — either a word name you have had searched (a NUANS report in most jurisdictions) or a numbered company, which is free and instant and can be renamed later. Directors and their addresses, a registered office address in the jurisdiction, and a share structure. Most small corporations use one class of common shares; if an investor is ever likely, have an accountant look at it before you file, because fixing a share structure afterwards is a real expense.

After filing

Get a CRA business number, register for GST/HST if you are over the $30,000 small-supplier threshold, register for payroll before the first paycheque, and open the corporate bank account. Keep the minute book current — it is ignored for years and then urgently needed during a sale, a loan, or an audit.