Thoughtwick can help with registration of business names in the provinces of Ontario and British Columbia, and with corporate registrations (business corporations and not-for-profit organizations) in the provinces of Ontario and British Columbia and in the federal jurisdiction, which can have its head office in any Canadian province or territory.
Business Names (Sole-Proprietorships and Partnerships):
In order to use any business name in Canada, it needs to be registered with your provincial or territorial government. If you do not have a registered business name, you can only do business under your own personal name. These registrations are for sole-proprietorships (one owner) and partnerships (two or more owners).
Business name registrations do not result in the formation of a separate legal entity. It is still the individual owner or owners providing the products and services for the business.
Note on general partnerships: Getting into a business partnership isn’t for everyone. In most cases you will want to consider incorporating instead. Take into account that someone else’s poor decisions could directly affect your reputation and personal assets.
Business Corporations:
There are a few main reasons to form a business corporation. Many business owners want to get the benefits of limited liability. This is a characteristic of corporations that keeps your personal and business affairs separate. In most cases, the personal liability of shareholders is limited to their investment in the corporation. Essentially, you can lose the value of your shares, but your house, car and personal bank accounts are not associated with the business and aren’t at risk if the company experiences legal or financial trouble. Directors, the people responsible for the day-to-day operation of the business, are personally responsible for ensuring that corporate taxes, sales taxes and payroll deductions are handled responsibly, but under normal circumstances are likewise insulated from personal loss should the business lose a lawsuit or go bankrupt. In addition to this, incorporation gives you enhanced control over your personal income. You can put yourself on payroll and set your own salary or wage. This allows you to pay your living expenses and devote the remainder to growing your business. You can even hire other family members or give them shares and pay dividends. Finally, and this is a big one, corporations tend to have a lower tax rate than individuals for business profits. Ask your business accountant for details on taxation.
Choosing a Jurisdiction:
Deciding whether to register your corporation at the federal or provincial/territorial level should depend on a few factors.
1/ Would you like your company name to come up in provincial/territorial searches outside of where you operate?
- The name reservation results for someone wishing to register a new company typically only show names from that specific province or territory as well as federal corporations. If you have an Ontario corporation, for example, and someone wanted to register the same name in Alberta, your company might not come up in their reservation report. If you have a federal company, it will appear in every jurisdiction that uses the NUANS system for name reports. This provides a little bit of extra protection, though you should still register trademarks rather than relying on this. It also lets others know that you’re out there, and if they are wise, they will choose a different name rather than risk confusion with another company.
2/ Are you fine with the extra costs associated with setup and maintenance of a federal company?
- Most provinces have a fee for what is called “extra-provincial registration” of corporations from other jurisdictions. Ontario does not require additional fees from Canadian federal corporations, fortunately, but other provinces and territories do. Sometimes, the simplicity in setup for a provincial corporation will be preferable.
3/ Will the corporation have physical locations in several Canadian provinces/territories, or is it likely to move its head office to another Canadian jurisdiction some time in the near future?
- Federal corporations have their names pre-approved for registration in several jurisdictions, which facilitates the process of supplementary registrations. For example, if you have a federal corporation that is based in British Columbia, and you want to also register in Ontario. No problem. The name is already approved. You just file the paperwork and away you go. If you have a British Columbia corporation wishing to do the same thing, you need to get the name approved for Ontario, and you may end up operating the company under different names in different provinces.
Not-For-Profit Entities:
This category consists of charitable and non-charitable organizations that are formed in order to accomplish a particular set of goals, but to not earn profit for their members. These corporations do not have shareholders and devote their resources to pursuing the purpose stated in their formation documents. Charitable organizations are more restricted in the types of activities they can perform, but can issue tax receipts for donations received. Non-charitable organizations can be formed for nearly any purpose. They can also receive donations, but do not issue tax receipts. These entities are corporations, with limited liability for their directors and officers.
