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Incorporation

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  • INCORPORATION

Incorporating in Canada: A Guide to Business Legal Formation

Embarking on the journey of Business Incorporation in Canada is a strategic step towards legitimacy, growth, and enhanced business opportunities. As you navigate this pivotal journey of Business Incorporation, meticulous attention to key aspects ensures a solid foundation for your enterprise. Choosing the right business structure, securing a unique and compliant business name, and crafting Articles of Incorporation are fundamental steps in this process. At TMP, we understand the intricacies of Canadian business incorporation and are committed to guiding you through each step. Our expertise will assist with unlocking a world of possibilities for your business.

Incorporation building in Canada
Incorporation in Canada: Office Desk

Benefits of Incorporating in Canada

Limited Liability

Protects personal assets from business debts.

Separate Legal Entity

Enables the business to own assets, enter contracts, and have its legal identity.

Perpetual Existence

Ensures business continuity despite changes in ownership.

Tax Advantages

Offers income splitting, tax deferral, and access to specific incentives.

Access to Capital

Allows the issuance of shares for fundraising.

Business Credibility

Enhances professionalism for customers, suppliers, and partners.

Ownership Transfer

Facilitates easy transfer of ownership through shares.

Employee Benefits

Enables stock options or share purchase plans for employees.

Enhanced Borrowing Capacity

Improves creditworthiness for securing loans.

Name Protection

Grants legal rights to the business name.

Flexibility in Ownership Structure

Allows diverse share classes for strategic planning.

Estate Planning

Facilitates seamless transfer of ownership to heirs.

What are the requirements to Incorporate in Canada?

incorporation CN Tower Canada

Choose Business Name

Ensure it complies with naming regulations and is available for use.

Select the Jurisdiction

Choose the business structure (federal, provincial, or extra-provincial).

Business Structure

Determine ownership structure and share classes.

Articles of Incorporation

Prepare and file with essential business details.

Corporate Bylaws

Draft internal rules governing the corporation.

Directors and Officers

Specify initial directors and officers.

Filing Fee

Pay the provincial filing fee.

Business Number and Tax Accounts

Obtain a Business Number and register for tax accounts with the CRA.

Provincial Requirements

Fulfill additional requirements as per the province.

Maintain Corporate Records

Keep accurate records, including minutes and financial statements.

How TMP Streamlines Your Incorporation

Name Search Assistance

Navigate name selection compliance effortlessly.

Navigate name selection compliance effortlessly.

Precision in crafting the foundation of your corporation.

Structural Consultation

Tailored advice on the ideal corporate structure.

Director Resolutions Drafting

Structured guidance for pivotal decisions.

Filing Services

Swift and accurate Initial Return/Notice of Change submissions.

CRA Account Registration

Seamless setup for GST/HST, Payroll, Import, and more.

Corporate Packages and Seals

Receive organized documentation and official seals.

incorporation Employees having discussion

Why Us

Financial Education

We prioritize educating our clients, equipping them with the knowledge to make sound financial decisions for their future success.

Seasoned Experts

Our experienced team offers deep expertise, ensuring reliable and comprehensive solutions for all accounting and tax needs.​

Personalized Solutions

Tailoring our services to each client's unique circumstances, we deliver customized solutions that address specific goals and challenges effectively.​

Modern Approach

Embracing cutting-edge technologies and innovative methods, we provide efficient and forward-thinking accounting and tax services to meet the demands of today's business landscape.​

FAQ

Investment income earned by a Canadian controlled private corporation (CCPC) does not benefit from the preferential tax treatment (small business deduction). The CCPC will also have to pay a refundable tax on the investment income, which gets added to the refundable dividend tax on hand pool. It gets a dividend refund upon paying out the dividend to you. However, having your investment assets held by your corporation can provide legal protection over the assets.
Yes, as a sole proprietor, you can transfer your business assets to the newly incorporated entity without immediate tax consequence. For assets with accrued gains, you can elect to roll-over the assets at cost under Section 85 of the Income Tax Act when you meet the eligibility. For assets with accrued losses, you can transfer them at fair market value.
No, the Small Business Deduction (SBD) generally does not apply to investment income earned by a corporation. The SBD is typically available for active business income rather than passive income, such as investment income. Investment income, including earnings from stocks and Guaranteed Investment Certificates (GICs), is taxed at a different (higher) rate than active business income.
A holding company is a corporation that owns and controls other companies but doesn’t engage in active business operations. Whether you should incorporate one depends on your goals. It can offer benefits including legal protection of the assets of the operating company once they are transferred over to the holding company. The operating company can pay tax-free dividends to the holding company. Therefore this can offer flexibility in the timing of dividend payout if the operating company has multiple shareholders.
Distributions from your corporation to you are typically taxed in two ways on your personal income tax return: dividend vs salary. Dividend income is generally taxed at a lower rate than regular income due to the dividend tax credit, especially for eligible dividends. However, it does not add to RRSP room or CPP entitlement. If you receive payments as salary or bonuses, they are treated as regular income. You and your company need to pay CPP contributions. Salary is a form of earned income for RRSP room accumulation. Which remuneration works best for you would depend on your individual tax circumstances
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No, one of the primary advantages of incorporating a business is the limited liability it provides. When you operate as a sole proprietorship, you are personally liable for the business’s debts and obligations. However, when you incorporate a business, it provides limited personal liability. In most cases, creditors can only go after the assets of the corporation, unless the debt is personally secured. However, it is important to note that CRA can hold the directors personally liable for the corporation’s tax debts.
Incorporation provides advantages if you plan to sell your ownership interest down the line. Selling shares of the corporation is easier to administer than selling assets of a sole proprietorship. You will calculate capital gain or loss based on the proceeds of the sale of your ownership interest. For CCPCs, you can potentially access the lifetime capital gains exemption to exclude the resultant capital gains when the eligibility requirements are met.

Corporate taxes in Canada are levied on the income earned by corporations. Both federal and provincial/territorial governments impose taxes on business income. The rates will vary based on the type of Corporation, income earned and tax credits the Corporation is entitled to.

You can register your corporation for taxation by filing an RC1 and registering a RC account with the Canada Revenue Agency (CRA). The process may vary depending on the type of corporation.

Yes, there are various tax incentives and credits available, including the Scientific Research and Experimental Development (SR&ED) program and investment tax credits

The small business deduction allows eligible Canadian-controlled private corporations to benefit from a lower tax rate on their first $500,000 of active business income.

Federal corporate taxes are imposed by the Canadian federal government, while provincial/territorial corporate taxes are imposed by the respective provincial or territorial governments. They are separate but complementary.

 Businesses in Canada may need to charge and remit GST/HST, depending on their revenue, type of Goods/Service they offer and location of their customers.

A common rule of thumb for allowable business expenses is any expenditure that contributes to the maintenance or growth of your business, as well as expenses that you wouldn’t have otherwise incurred if you were not operating this business

To minimize your corporate tax liability, a comprehensive analysis of your financial structure is necessary. This involves identifying potential strategies within the Income Tax Act that can effectively reduce your corporate tax burden.

Corporate tax returns in Canada are typically filed using the T2 Corporate Income Tax Return and corresponding schedules that apply to your business with the CRA.

In Canada, corporate tax returns are typically submitted using the T2 Corporate Income Tax Return and the associated schedules that pertain to your specific business with the CRA.

 You should maintain records of:

–  financial statements and corresponding general ledger
– receipts, invoices
–  contracts
– and other documents related to your business activities for at least six years.

How much does it cost to incorporate?

Basic

Draft Articles of Corporation, One Class of Shares, File initial return and Government fee

$1,000

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Expert

Draft Articles of Corporation, upto two Classes of shares, File initial return, Provide Shareholder agreement, Corporate By-laws and Governemnt fee

$2,000 

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Premium

Draft Articles of Corporation, up to three Classes of shares, File initial return, Provide Shareholder agreement, Corporate By-laws, Share Certificates, Share registry, Minute Book, Corporate Seal and Government fee

$3,000

Get Started

Custom

Please fill in this questionnaire and we’ll get back to you with a quote.

$1,500 +HST

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Next Steps

Step 1

Please fill in this questionnaire

Questionnaire

Step 2

Schedule a consultation with one of our HR consultants to receive a final quote and a checklist of the required data

Step 3

Upload requested data onto cloud folder shared

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Have a question, an idea, or just want to learn more about Triple M Professional Corp.? We’re all ears. Fill out the form or Email us and we’ll connect with you soon.

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Markham Office
905-237-6424
675 Cochrane Dr East Tower 6th Floor, Markham, ON, L3R 0B6
Toronto Bay Street Office
416-333-1116
401 Bay Street, 16th Floor Toronto, ON, M5H 2Y4
San Francisco Office
415-366-5667
590 California Street 16th Floor, San Francisco, CA 94104
New York Office
212-651-9101
555 Madison Ave 5th Floor Manhattan,
NY 10022
Toronto King Street West Office
416-333-1116
100 King Street West, Suite 5600, Toronto, ON, M5X 1C9
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