Everything You Need To Know About Articles Of Incorporation
As an entrepreneur, if you’re looking to incorporate your business in Canada, whether at the provincial or federal level, you’ll need to file articles of incorporation.
Articles of incorporation refer to a specific set of legal documents that small business owners in Canada need to file with a government body in order to legally incorporate their business.
This handy guide will walk you through the process of filing your articles of incorporation from start to finish.
Why do articles of incorporation matter?
Articles of incorporation is a term that is sometimes referred to as incorporation, corporation, limited company, limited liability, Letters Patent, and Certificate of Incorporation. No matter the jargon, the definition remains the same.
Articles of incorporation are not just another step in setting your business up for success. They also ensure that your business is following certain rules concerning ownership of your company. For instance, both provincial and federal corporations must meet certain director residency requirements that stipulate that at least 25 per cent of a company’s directors be a citizen or permanent resident of Canada. This means that if your company has less than four directors, at least one director must be a citizen or permanent resident of Canada.
Articles of incorporation are documents that are submitted on a territorial, provincial, and federal level, and aim to identify your corporation’s operating purpose and regulations. Without these documents, your business cannot be registered or documented as an incorporated entity.
There are several key differences between federal and provincial articles of incorporation. Let’s take a look:
Federal articles of incorporation
Federal incorporation means that your business gets the right to operate anywhere in the country, and your business name is protected Canada-wide.
Provincial articles of incorporation
Provincial incorporation means that your business name is only protected within the province you conduct business in. This could mean that potentially, a completely different business with the same name can legally operate elsewhere in Canada and there would be no legal ramifications for that company. If you incorporate at the provincial level instead of the federal level, you may only conduct business in that specific province.
Incorporating at a provincial level means that you must also file a corporate annual return with your provincial government within 60 days of your incorporation anniversary date.
Are articles of incorporation different for each province?
Unlike incorporating at the federal level, articles of incorporation at the provincial level come with their own set of rules, rights, and protections.
If you don’t want to incorporate federally, you can actually incorporate in multiple provinces, so long as you take the right steps. Once you obtain your business license, you may want to do some research to see if there are any necessary agreements to review. Certain provinces have extra-provincial registration agreements that make it easier for you to conduct business province-to-province.
The New West Partnership Trade Agreement (NWPTA), for example, allows Canadians living in Alberta, British Columbia, Saskatchewan, and Manitoba to conduct inter-provincial business seamlessly. Other provinces, like Ontario and Quebec, have their own special province-to-province agreement that allows you to incorporate your business in one province and do business in the other. If you want to incorporate at the provincial level, it’s always a good idea to do your homework and see if certain provinces could benefit your business in ways that another couldn’t.
Benefits of filing articles of incorporation
There are several reasons that an individual would consider filing articles of incorporation. These include, but are not limited to:
Unlike sole proprietorship, an incorporated business separates you as an individual from all aspects of the business, including outstanding debts or financial obligations.
The name you choose to incorporate your business with is protected against anyone trying to use the same name. This brings legal benefits to the business since this name is used in all contracts, invoices, negotiable instruments, and other goods and services.
Lower corporate tax rates
As a business owner, you may have the opportunity to save tax dollars. The amount of tax you can write off depends on the nature of your business and the annual revenue generated. But you may also avoid the double taxation that occurs if an entrepreneur doesn’t incorporate their business.
Being incorporated legitimizes your business and adds a needed element of professionalism. Some consumers, vendors, and partners prefer to do business with an incorporated company over other businesses that haven’t been properly registered due to an added level of security.
Build customer loyalty
Being incorporated lends a certain quality of authenticity and professionalism to your business. Shareholders and potential investors may feel more comfortable conducting business with you if they can verify that you are an incorporated entity. On the other hand, businesses that are not incorporated may miss out on building a business-to-business client base.
Requirements for articles of incorporation
Prior to incorporating your business, you will need to gather the following information in order to file your articles of incorporation:
- Name or number of your business
A corporate name should be a good reflection of your business and distinctive enough that it doesn’t make consumers think of another brand or business. The name selected must include a valid NUANS (New Upgraded Automated Name Search) report. This program checks to make sure your name is available and not already trademarked.
- Full address of the corporation’s registered office
This shows the province or territory in Canada where your registered office is to be situated. It’s important to note that you cannot use P.O. box address.
- Names and addresses for directors/incorporators for the articles of incorporation
You will also need to provide the accurate names and addresses of everyone involved in the business.
- Directors’ citizenship status
If your business is incorporated federally or provincially in Ontario, at least 25 per cent of the directors must be a Canadian citizen. Therefore, if you have fewer than four directors, at least one must have citizenship.
- Share structure and provisions
It is likely that your business will be run by multiple people, each owning a different portion of the company (reflected by the number of shares bought). You may choose to have multiple share classes when you incorporate, meaning different shareholders will have different rights and privileges over the company.
- Any restrictions for business activity or share structure transfer
As a corporation, you may set out any restrictions on activities that the corporation may carry out. If there are no restrictions required, you can leave this section blank.
Ready to incorporate?
Filing your articles of incorporation may be a few extra steps, but doing so will help give your business the boost it needs to jumpstart growth and opportunity.
Ownr can help you digitally incorporate your business in the easiest and fastest way possible. We even provide tailored service details based on the province you wish to incorporate your business.
Ownr will guide you every step of the way at a fraction of the cost of working with a lawyer. From searching for a business name to receiving your articles of incorporation by email in one business day, we can help you get your business up and running in no time.
Ready to start your business? Ownr has helped over 40,000+ entrepreneurs hit the ground running quickly—and affordably. If you have questions about how to register or incorporate your business, email us at email@example.com.
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.