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How to register your Canadian IT Business Corporation, create a Name and open Tax Accounts


Think of Incorporating your IT business, plan to do it yourself and do it right? Easy steps to create a private company taking care of specifics in freelance professional work.

Basic aspects of Business Corporation registration and start of operation by the independent IT contractor working to take their business to the new level.






1. Making Choice between Federal and Provincial Corporation




FEDERAL CORPORATION


- Cost of Registration:
Cost to incorporate online is $ 200 payable at the end of the process of online registration by Credit Card or other online payment options. By mail: $ 250.

Corporations Canada
Industry Canada
235 Queen Street
Ottawa ON K1A 0H5
Telephone:613-941-9042
Fax: 343-291-3409
Toll free: 1-866-333-5556

- Extra-provincial Registration Fees: Federal Corporations must also apply for provincial registration in the province of their location. The Fees for provincial registration vary from province to province. Currently there is no fee for such registration in Ontario.

Newfoundland.......................$560
Prince Edward Island............$260
New Brunswick.....................$212
Nova Scotia..........................$252
Quebec................................$308
Ontario.................................No cost
Saskatchewan......................$340 (Provincial name search of $75 included)
Manitoba..............................$349 (Provincial name search of $49 included)
Alberta.................................$395
Northwest Territories.............$300
Yukon Territory.....................$335
British Columbia...................$391 (Provincial name search of $39 included)


- Corporate Name: NUANS Name Search Report is required in order to register Corporation under a Business Name. Cost is about $ 30 for NUANS Federal Name Search. It is important to realize that since a Federal Corporation reserves its name nation-wide, there is much closer examination of the proposed business name and any existing name similarities by the registrar. In case the proposed name of a Federal Corporation closely matches with any existing corporate names, registration under that name can be blocked by the authorities.

- Annual Fees: Annual Return is to be submitted to Industry Canada each year within 60 days after the year-end, and is filed separately from Corporate Tax Return online or by mailing a completed form. The return contains information about corporation's address, directors and annual meeting. Fee for online filing is 20 dollars, the cost of filing paper return is 40 dollars.

- Length of registration process: If registered online, the certificate of incorporation is emailed in form of Adobe Acrobat file within the next 24 hours. Registration by mail takes about two weeks.

- Tax Filing Requirements: Tax filing requirements are same for Federal and Provincial Corporations and include but not limited to:

- Filing T2 Corporate income Tax Return within six month period after the year end
- Filing HST Returns by the due date as specified by CRA
- Filing T4, T5, and other required forms with the CRA

See detailed information on HST, Corporate Tax, T4, T5 and other tax filing requirements for typical IT Corporation


- Restrictions on types of business the corporation may do:
Federal Corporation can do business in any province as well as internationally and its business name is protected nation wide.

- Amendments to corporation's charter: The corporation may amend its charter to change its business name or other charter provisions. Cost of such amendment for Federal Corporation is $ 200.



PROVINCIAL CORPORATION


- Cost of Registration:
Cost to incorporate online is $ 330 payable at the end of the process of online registration by Credit Card or other online payment options. In person or by mail: $ 360.

Ministry of Government Services
Companies and Personal Property Security Branch
Suite 200
393 University Ave
Toronto ON M5G 2M2

- Annual Fees: Annual Return is submitted to Canada Revenue Agency each year on Schedule 546 as part of T2 Corporate Tax Return. Canada Revenue Agency files the return with Ministry of Government Services upon receipt. The return contains information about corporation's address, directors and annual meeting. There is no fee for filing annual return by Ontario Corporation.

- Length of registration process: Registration by in person takes place immediately when the Articles of incorporation are accepted by the Companies and Personal Property Security Branch at:

393 University Ave., Suite 200
Toronto ON M5G 2M2

and the incorporator receives copy of the Articles of incorporation stamped by the ministry.
If registered online, the certificate of incorporation is emailed in form of Adobe Acrobat file within the next 24 hours. Registration by mail takes about two weeks.

- Tax Filing Requirements: As mentioned above, tax filing requirements are same for Federal and Provincial Corporations and include but not limited to:

- Filing T2 Corporate income Tax Return within six month period after the year end
- Filing HST Returns by the due date as specified by CRA
- Filing T4, T5, and other required forms with the CRA

Follow this link for HST, Corporate Tax, T4, T5 requirements for typical IT Corporation


- Restrictions on types of business the corporation may do:
Provincial corporation can do business in any province as well as internationally and its business name is protected province wide.

- Amendments to corporation's charter: The corporation may amend its charter to change its business name or other charter provisions. Cost of such amendment for Ontario Corporation is $ 150.

CONCLUSION: Considering the example of Ontario-based business, Federal corporation has lower registration cost, however it may not always be possible to incorporate federally under desired business name. If the proposed business name is disallowed for federal incorporation, the Ontario Corporation would be the better choice as it places less restrictions on business name choice. Ontario Corporation can do business internationally or anywhere in Canada. Below you can find step by step description of registration process for Federal, and Provincial Corporation.





2. Preparation for Registration


PROVISIONS OF THE ARTICLES OF INCORPORATION


This article expressly excludes any questions related to the provisions of the articles of incorporation as its main focus is on technical process of corporate registration only. Different situations require different approach to various articles provisions that can be complex and describe in detail such matters as shareholders rights and privileges, classes of shares and how they can be issued, along with other matters that can be important for future corporation's activities. The single owner/director corporation founded by IT Professional, taken as an example and referred to in this article, in most cases will not require any specific articles provisions. Corporation's charter can also be changed after incorporation for a fee as indicated above. The readers, however, are cautioned and should agree that by using any of the information provided in this article they take full legal and financial responsibility for their actions.


NUANS NAME SEARCH


The corporation can be formed with a business name, or without such. When no name is proposed, a seven-digit number assigned by registrar, followed by "Canada Inc." or "Ontario Inc." is designated as corporation's name. For example: 1237654 CANADA Inc., or 9638520 Ontario Ltd. The corporate name can end with either:

Inc.
Ltd.
Corp.
Incorporated
Limited
Corporation

IT businesses are generally advised by their accountants to register with a business name due to " Personal Services Corporation" concern. In that case NUANS name search is required at the time of incorporation. The document is an official report that contains a list of same or similar names. Federal incorporation requires Federal NUANS report, while provincial NUANS report is needed for provincial registration. Below is an image of the title page of a sample Federal report:

Federal NUANS report



The document can be ordered online for the price of about $25 plus tax in its most basic version. Services such as Arvic.com also offer three free preliminary searches that allow to make sure the business name is available. Note that pre-search report is less detailed. Once ordered, the Adobe Acrobat report file takes about 24 hours to be delivered to provided email address.



3. Registration Procedures





PROCESS OF REGISTRATION for FEDERAL CORPORATION:


Follow the link to Industry Canada Online Filing Centre https://www.ic.gc.ca/app/scr/cc/CorporationsCanada/hm.html?locale=en_CA , or google "register federal corporation online" to get to screen pictured below:


Industry Canada Registration Start Page



Select "Incorporate" to start online registration process.

During online registration, information such as name and address of person authorizing registration as well as name and address of the corporation needs to be provided.

Name search unique identification number will then be requested and the reserved name should be found by the system.

Then the following questions need to be answered in detail:

1. Please explain the nature of the business the corporation and meaning of proposed business name.

2. How is the proposed business name related to corporation's business and how did you come up with the particular proposed name?

3. Name the activities the business is planning to participate in; what goods or services are going to be provided.

4. Where are the prospective clients of corporation going to be located?

As a next step, officer/director information should be provided, note that at least one of corporate directors must be a Canadian resident.

Then the form will ask to specify:

- Classes, maximum number of shares that the corporation is authorized to issue

- Restrictions on share transfers

- Minimum and maximum number of directors

- Restrictions on the business the corporation may carry on

- Other provisions



In our basic example of single-owner IT business following answers will be provided:

- Classes, maximum number of shares: An unlimited number of common shares. An unlimited number of preferred shares.

- Restrictions on share transfers: None.

- Minimum and maximum number of directors: 1 to 10.

- Restrictions on the business the corporation may carry on: None.

- Other provisions: None.


Below is a screen capture of Articles of Incorporation Form 1 that needs to be printed and signed by the incorporator before proceeding to next step:


Articles of Incorporation Form 1



Thereafter, Articles of Incorporation Form 2 also needs to be printed and signed by the incorporator:


Articles of Incorporation Form 2



Before conclusion of the process the provincial registration will be proposed. As indicated above, registration of Federal Corporation in Ontario is free of charge. In process of provincial registration, the information whether the corporation plans to have any employees will be requested. The corporation is not required to register any payroll accounts upon registration as these can be registered when they become necessary and business decides to officially hire employees. The choice whether to compensate the owner in form of salary, bonuses or dividends needs to be made after weighting all options taking into account individual circumstances. Click here to read more on Dividends vs. Salary.


After the process is completed, the payment is requested as a next step. Once the online payment of $ 200.00 is made, the final confirmation page is displayed.


Click here to see full set of step by step screen captures of Federal Incorporation.


Industry Canada Federal Articles Submission






PROCESS OF REGISTRATION for ONTARIO CORPORATION:




Ontario Articles of Incorporation page 1



Ontario Articles of Incorporation page 2



Ontario Articles of Incorporation page 3



Ontario Articles of Incorporation page 4



Ontario Articles of Incorporation page 5



Ontario Articles of Incorporation page 6




4. Opening Bank Account


Once the copy of Articles of Incorporation is obtained, the Incorporators can proceed with registering the business bank account. The listed directors should be present when opening the bank account.



5. Opening Tax Accounts


Once the corporation is registered, it takes about two weeks for the information about newly founded corporation to be forwarded to Canada Revenue Agency. The CRA assigns to new corporation a nine-digit Business Number ending with RC0001. That business number is used by the agency to identify corporation for the purpose of corporations tax. If the business plans to make the purchases on which it will claim the Input Tax Credits or HST refund, a CRA HST tax account ending with RT0001 should be opened ahead of making such purchases. Once the initial RC0001 business number is registered, HST tax account (RT0001) can be registered by calling CRA at 1-800-959-5525 (press "*" or "0" to reach the operator), online, or by mailing a completed form.


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