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There are different advantages to incorporating federally, provincially - Metro US

There are different advantages to incorporating federally, provincially

In Canada, there are two jurisdictions in which you can incorporate: federal or provincial.

At first glance, the federal option would seem to be the best solution as it covers your company Canada-wide and has a $200 fee instead of $360, for example, in Ontario. However, this issue is not that straightforward.

As I have explained recently in this column, in order to incorporate a named company in Canada, you must obtain a N.U.A.N.S. search which provides you with a list of similarly named incorporated, registered and trademarked businesses and/or names in Canada (except for British Columbia and Quebec).

This is the same for federal or provincial incorporations. Here, however, the process differs.

If you are incorporating provincially, all you need to do is review the name search and if there is no named business that is an exact match, the Ontario government will allow you to file Articles Of Incorporation to commence the process of starting a business.

If you are incorporating federally, you should apply to Industry Canada for pre-approval of your name. Officials who are in charge of this pre-approval process take a much more proactive approach to naming of corporations.

If the proposed name is similar to another registered business and would lead to confusion among consumers they will disallow the name: Even if you are a company operating in Ontario and the similarly named company is in Nova Scotia.

Secondly, the powers that be at Industry Canada will also examine the proposed name to make sure it is descriptive of the business that they will be carrying on. If, for example, I were to apply as Cowan Consulting Inc., I would probably receive a polite letter indicating that my proposed name should be more descriptive of the services being provided: Cowan Legal Consulting Inc. This process can lead to a much longer and more complex incorporating process.

Also, there is a division of legal power whereby the provinces control and legislate in most areas of commercial activity, except primarily in the areas of transportation and communication. It, therefore, makes sense to incorporate in the jurisdiction that controls your business laws.

There are a number of other factors that need to be considered when deciding where to incorporate. My point is that before you blindly go into the process, you should consult with a lawyer who is knowledgeable in this area of law so they can properly advise you where you should be incorporating.

jeff@cowanandtaylor.com

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