Federal Incorporation

Federal incorporation is one option for incorporating a new business. The other option is provincial incorporation.

There are benefits to both approaches. If you don’t have a solid understanding of the two options and what benefits and limitations exist with each, it is advisable that you work with a business lawyer who is experienced in business incorporation. Guidance in this area is invaluable since the implications of making the wrong decision could be costly.

Today we are going to explore the benefits of federal incorporation in Canada. To cover the basics, incorporating a business gives you a corporation, which is a legal entity that has the same rights as a person in Canada – meaning it can own property, borrow money and execute contracts.

When you incorporation federally, you have the right to use your name across Canada – meaning in each province you are authorized to do business and use the corporation’s legal name.

A corporation can reduce your personal liability, which is important to protect your personal assets. If the business were to go bankrupt, you are not responsible personally for the debts of the corporation.

You will also get lower corporate tax rates. Personal taxes are typically higher than corporate taxes.

As a corporation, you will have better access to capital and grants – which is key to start-ups. You can typically borrow money at lower rates. You can also sell shares to raise funds.

The business also exists continuously – meaning it doesn’t end when the owner dies. The corporation will exist until it goes bankrupt, is wound up or amalgamates with another corporation.

CEO Law powers a self serve platform that allows entrepreneurs and start-ups to access highly specialized and experienced lawyers for a flat rate fee to help with incorporation. This allows individuals access to the consultation they need to ensure they are starting their corporation correctly, right out of the gate.

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