Incorporation
Unlock the Advantages of a Corporate Structure for Your Business Growth through Business Incorporation
- 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.
Benefits of Incorporating in Canada
Limited Liability
Separate Legal Entity
Perpetual Existence
Tax Advantages
Access to Capital
Business Credibility
Ownership Transfer
Employee Benefits
Enhanced Borrowing Capacity
Name Protection
Flexibility in Ownership Structure
Estate Planning
What are the requirements to Incorporate in 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.
Why Us
Educating Clients
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.
Frequently Asked Questions (FAQs)
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.
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.
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