This short video segment (spoken transcript) explains the practical differences between federal and provincial incorporation in Canada. The speaker (Bob Gauvreau) outlines historical administrative differences (extra federal filing and fee tied to minute-book upkeep), recent changes making annual federal-like filings required in some provinces (e.g., Ontario), and practical considerations (employment law jurisdiction, mobility and branding like ‘Canada Inc.’ vs provincial suffixes).
Chapters
So one of the questions that gets raised frequently is, should I incorporate federally or should I incorporate provincially? And really the answer is going to be it depends. And what used to happen is that federal corporations had an additional filing and that additional filing had a fee attached to it. And essentially that additional filing was related to is your minutebook up to date? What was the date of your last shareholder board of directors meeting? What resolutions were passed? What was the date of that meeting? And your minute book is essentially up to date. And it was an extra filing that took place. So predominantly we would advise people to do a provincial registration. Again, thinking of setting up a federal corporation, you do adhere to the federal laws related to employment versus the provincial rules. So it's something to keep in mind when you're starting to build a team, whether or not you want to fall into those multi jurisdictional or federal jurisdictional rules and regulations. Now they've changed the rules specifically in Ontario and in many of the other provinces where that same federal filing that used to be required and not in Ontario, it's now required in Ontario that there's a separate annual filing and that fee does take place. So part of the value of not introducing a federal corporation has been eliminated. And what I would say is there's not much substantial difference between a federal or a provincial incorporation. So really, just looking at those legislations or those frameworks that you want to fall into, whether you want to fall into the federal or stay specifically in a particular province, look at that and see what best fits you and where you're going with your business. If you're trying to build out a team, what that would look like and the implications of it. But for many individuals, we tend to go more of a federal incorporation now because if you move from one location to the other, it essentially has a Canada Inc. Number versus an Ontario or a B.C. inc. Provincial number. So you can essentially move from one location to the other without having to say, I'm in Ontario or I'm in bc, you're in Canada. So it just has a different esthetic to it, but for the most part not a substantial difference between a federal or a provincial incorporation.
