Incorporation
Unlock the Advantages of a Corporate Structure for Your Business Growth through Business Incorporation
- INCORPORATION
Incorporating in Canada: A Guide to Business Legal Formation
Embarking on the journey of Business Incorporation in Canada is a strategic step towards legitimacy, growth, and enhanced business opportunities. As you navigate this pivotal journey of Business Incorporation, meticulous attention to key aspects ensures a solid foundation for your enterprise. Choosing the right business structure, securing a unique and compliant business name, and crafting Articles of Incorporation are fundamental steps in this process. At TMP, we understand the intricacies of Canadian business incorporation and are committed to guiding you through each step. Our expertise will assist with unlocking a world of possibilities for your business.
Benefits of Incorporating in Canada
Limited Liability
Separate Legal Entity
Perpetual Existence
Tax Advantages
Access to Capital
Business Credibility
Ownership Transfer
Employee Benefits
Enhanced Borrowing Capacity
Name Protection
Flexibility in Ownership Structure
Estate Planning
What are the requirements to Incorporate in Canada?
Choose Business Name
Ensure it complies with naming regulations and is available for use.
Select the Jurisdiction
Choose the business structure (federal, provincial, or extra-provincial).
Business Structure
Determine ownership structure and share classes.
Articles of Incorporation
Prepare and file with essential business details.
Corporate Bylaws
Draft internal rules governing the corporation.
Directors and Officers
Specify initial directors and officers.
Filing Fee
Pay the provincial filing fee.
Business Number and Tax Accounts
Obtain a Business Number and register for tax accounts with the CRA.
Provincial Requirements
Fulfill additional requirements as per the province.
Maintain Corporate Records
Keep accurate records, including minutes and financial statements.
How TMP Streamlines Your Incorporation
Name Search Assistance
Navigate name selection compliance effortlessly.
Navigate name selection compliance effortlessly.
Precision in crafting the foundation of your corporation.
Structural Consultation
Tailored advice on the ideal corporate structure.
Director Resolutions Drafting
Structured guidance for pivotal decisions.
Filing Services
Swift and accurate Initial Return/Notice of Change submissions.
CRA Account Registration
Seamless setup for GST/HST, Payroll, Import, and more.
Corporate Packages and Seals
Receive organized documentation and official seals.
Why Us
Educating Clients
We prioritize educating our clients, equipping them with the knowledge to make sound financial decisions for their future success.
Seasoned Experts
Our experienced team offers deep expertise, ensuring reliable and comprehensive solutions for all accounting and tax needs.
Personalized Solutions
Tailoring our services to each client's unique circumstances, we deliver customized solutions that address specific goals and challenges effectively.
Modern Approach
Embracing cutting-edge technologies and innovative methods, we provide efficient and forward-thinking accounting and tax services to meet the demands of today's business landscape.
FAQ
Investment income earned by a Canadian controlled private corporation (CCPC) does not benefit from the preferential tax treatment (small business deduction). The CCPC will also have to pay a refundable tax on the investment income, which gets added to the refundable dividend tax on hand pool. It gets a dividend refund upon paying out the dividend to you. However, having your investment assets held by your corporation can provide legal protection over the assets.
Yes, as a sole proprietor, you can transfer your business assets to the newly incorporated entity without immediate tax consequence. For assets with accrued gains, you can elect to roll-over the assets at cost under Section 85 of the Income Tax Act when you meet the eligibility. For assets with accrued losses, you can transfer them at fair market value.
No, the Small Business Deduction (SBD) generally does not apply to investment income earned by a corporation. The SBD is typically available for active business income rather than passive income, such as investment income. Investment income, including earnings from stocks and Guaranteed Investment Certificates (GICs), is taxed at a different (higher) rate than active business income.
A holding company is a corporation that owns and controls other companies but doesn’t engage in active business operations. Whether you should incorporate one depends on your goals. It can offer benefits including legal protection of the assets of the operating company once they are transferred over to the holding company. The operating company can pay tax-free dividends to the holding company. Therefore this can offer flexibility in the timing of dividend payout if the operating company has multiple shareholders.
Distributions from your corporation to you are typically taxed in two ways on your personal income tax return: dividend vs salary. Dividend income is generally taxed at a lower rate than regular income due to the dividend tax credit, especially for eligible dividends. However, it does not add to RRSP room or CPP entitlement. If you receive payments as salary or bonuses, they are treated as regular income. You and your company need to pay CPP contributions. Salary is a form of earned income for RRSP room accumulation. Which remuneration works best for you would depend on your individual tax circumstances
Corporate taxes in Canada are levied on the income earned by corporations. Both federal and provincial/territorial governments impose taxes on business income. The rates will vary based on the type of Corporation, income earned and tax credits the Corporation is entitled to.
You can register your corporation for taxation by filing an RC1 and registering a RC account with the Canada Revenue Agency (CRA). The process may vary depending on the type of corporation.
Yes, there are various tax incentives and credits available, including the Scientific Research and Experimental Development (SR&ED) program and investment tax credits
The small business deduction allows eligible Canadian-controlled private corporations to benefit from a lower tax rate on their first $500,000 of active business income.
Federal corporate taxes are imposed by the Canadian federal government, while provincial/territorial corporate taxes are imposed by the respective provincial or territorial governments. They are separate but complementary.
Businesses in Canada may need to charge and remit GST/HST, depending on their revenue, type of Goods/Service they offer and location of their customers.
A common rule of thumb for allowable business expenses is any expenditure that contributes to the maintenance or growth of your business, as well as expenses that you wouldn’t have otherwise incurred if you were not operating this business
Corporate tax returns in Canada are typically filed using the T2 Corporate Income Tax Return and corresponding schedules that apply to your business with the CRA.
You should maintain records of:
– financial statements and corresponding general ledger
– receipts, invoices
– contracts
– and other documents related to your business activities for at least six years.