Incorporating your business in Canada creates a separate legal entity that limits your personal liability and can significantly reduce your tax burden. In 2025, you can incorporate federally through Corporations Canada or provincially through your province's corporate registry. This guide walks you through every step.
Why Incorporate?
- Limited liability: Personal assets are protected from business debts and lawsuits
- Lower tax rate: CCPCs pay just 9% federal tax on the first $500,000 of active business income (vs. up to 33% personal rate)
- Income splitting: Pay dividends to family shareholders in lower tax brackets
- Salary deferral: Leave profits in the corporation and pay yourself only what you need
- Credibility: "Inc." or "Ltd." signals permanence to clients and lenders
- Lifetime Capital Gains Exemption: Up to $1.25M exemption on the sale of qualifying small business shares (2025)
Federal vs. Provincial Incorporation
| Feature | Federal (Canada Business Corporations Act) | Provincial |
|---|
| Operating provinces | All provinces (extra-provincial registration required) | One province (others require registration) |
| Name protection | Nationwide | Within province only |
| Cost | $200 online | $200–$360 depending on province |
| Reporting | Annual return to Corporations Canada | Annual return to provincial registry |
| Best for | Businesses operating in multiple provinces | Businesses operating in one province |
Step-by-Step: How to Incorporate in Canada
Choose your corporation name or use a numbered company
You can choose a distinctive name (e.g., "ABC Consulting Inc.") or use a numbered company (e.g., "1234567 Ontario Inc."). Named corporations require a NUANS name search to confirm availability. Numbered companies are faster and cheaper — most small business owners start with a number and add a trade name.
Complete a NUANS name search (if using a name)
A NUANS (Newly Upgraded Automated Name Search) report costs about $300 and confirms your proposed name doesn't conflict with existing businesses. Valid for 900 days. Required for federal incorporation; most provinces also require it.
Prepare your articles of incorporation
Articles of incorporation define the corporation's structure: share classes, restrictions on share transfers, number of directors, and any restrictions on business activities. For most small businesses, standard articles work fine. A corporate lawyer can prepare custom articles for ~$500–$2,000.
File with the appropriate registry
Federal: File online at Corporations Canada (ised.canada.ca) — $200 fee. Ontario: File at the Ontario Business Registry — $360. Alberta: $275 via registries.alberta.ca. BC: $350 via BC Registries. Most provinces offer online filing.
Obtain your Certificate of Incorporation
Once approved (usually 1–5 business days online), you receive a Certificate of Incorporation with your corporation number. Keep this document — you'll need it to open a business bank account, sign contracts, and for tax filings.
Register for a CRA Business Number
Register your corporation with the Canada Revenue Agency to get a Business Number (BN) and set up accounts for corporate income tax, HST/GST, and payroll. Do this at cra.gc.ca/en/register-business or by phone.
Open a corporate bank account
A corporation must have its own bank account separate from any personal accounts. Bring your Certificate of Incorporation, articles, corporate resolution authorizing the account, and government ID.
Create corporate bylaws and a minute book
Bylaws govern how the corporation operates. A minute book holds all corporate records: certificate, articles, bylaws, shareholder and director registers, and minutes of meetings. Many incorporation services provide templates.
Cost to Incorporate in Canada (2025)
| Province/Federal | Filing Fee | NUANS Report | Lawyer Fees (optional) |
|---|
| Federal | $200 | ~$300 | $500–$2,000 |
| Ontario | $360 | Included | $500–$2,000 |
| British Columbia | $350 | Included | $500–$2,000 |
| Alberta | $275 | ~$300 | $500–$2,000 |
| Quebec | $353 | Included | $500–$2,000 |
DIY vs. Lawyer: You can incorporate yourself online for $200–$360. Using a corporate lawyer costs $1,000–$3,000 but ensures your share structure is optimized for income splitting, future investment, and the Lifetime Capital Gains Exemption. For most consultants or freelancers incorporating for tax purposes, DIY is fine.
After Incorporation: Key Obligations
- File annual returns: Both federal and provincial registries require annual returns (separate from tax returns)
- File T2 Corporate Tax Return: Due 6 months after fiscal year end; taxes payable 2–3 months after year end
- Maintain corporate minute book: Document all major decisions and annual meetings
- Register for HST/GST if revenue exceeds $30,000 in any 12-month period
- Set up payroll if paying yourself a salary or hiring employees
Should You Incorporate?
Incorporation generally makes sense when you're earning more than $60,000–$80,000 in business income. Below that threshold, the tax savings often don't justify the added complexity and cost of maintaining a corporation. However, if liability protection is a concern or you're building a business you plan to sell, incorporating earlier can be beneficial.
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