How Much Does It Cost to Incorporate in Canada? 

Every 15 minutes, someone starts a new business in Canada. But what does it really cost to do this? As Stephen Poloz, a renowned Canadian economist, once said, “Incorporation is the armor businesses wear in the battlefield of commerce.” It’s essential to see this not just as a cost but as a vital investment. Why? Because the price of not incorporating correctly can be devastating. Imagine facing legal issues and risking everything you’ve worked for. The consequences of not doing it right far outweigh the costs of doing it correctly. This article will break down the true incorporation costs and guide you on how to invest wisely in your business’s future. Let’s ensure you’re armored up and ready for the business world. 

What is Incorporation?

Before examining the incorporation costs and incorporation process for a business, it is important to start with a clear understanding of what it means to incorporate a company.  

Many businesses start out as sole proprietorships. As a sole proprietor, you are personally responsible for all aspects of your business – you get all the profits, but you also take on all the risks and liabilities. Your personal assets like your home or savings could be impacted if the business struggles financially or faces legal issues. While being a sole proprietor may work when starting out, as your business grows, you should seriously consider incorporation.  

Incorporation is a form of business ownership that legally separates a business from its owners.  The corporation is its own “person” in the eyes of the law, able to own property, make contracts, and sue or be sued. This separation shields your personal finances if the company runs into trouble. This is different from a basic sole proprietorship where there’s no legal separation between you and your business. 

Why Should I Incorporate My Business?

In our experience, the key benefits of incorporating include personal liability protection, tax advantages, name protection, prestige, and easier access to financing. There are other benefits, but we believe that these ones are the most important. Let’s review: 

Protection From Personal Liability

The key benefit of a corporation is shielding your personal assets, i.e. anything under your own name. This means your home and cars are safe if your business faces money or legal problems. For example, as a sole proprietor, if your business gets sued, your personal assets could be at risk. But if you incorporate your bakery, your personal assets are protected. Legal matters belong to the business, not you. Your personal finances stay safe from business issues. Incorporation is your financial safety net. 

Tax Advantages

Beyond limited liability, another significant perk of incorporating is the tax advantages. Corporations enjoy a lower income tax rate, around 12% on earnings up to $500,000. This lets you reinvest more money into your business. Also, a lifetime capital gains exemption shields over $883,384 from capital gains tax when you sell the company. Incorporation offers various other tax benefits, such as income splitting, insurance tactics, and tax grants.

To learn more, check out our articles: 

“How Much Tax do I Pay When Incorporated?” 

“Will I Pay Less Tax If I Incorporate?” 

Raising Money

Growing a business requires funds. For sole proprietors, securing loans, grants, or investors can be tough. Many lenders shy away from unincorporated businesses, and investors often prefer businesses they can invest in through shares. 

Prestige

Incorporation signals professionalism, legitimacy, and organization. This is vital when landing your first major client, wooing investors, or selling the business to a third-party buyer. 

Name Protection

Federal incorporation offers valuable name protection. It allows your business to operate under its name across the country, even if a similar name exists in another province. This safeguards your brand and extends your operational reach. 

Easier Succession Planning

Succession planning is crucial, and a corporate structure shines in this area. In Canada, a corporation is a separate legal entity that endures even after the owner’s passing, safeguarding your business’s future. Sole proprietorships and partnerships vanish with their owners. Incorporation eases asset transfers and secures a lasting legacy. 

Depending on your situation, there may also be disadvantages of incorporation that you should consider.  

To learn more on whether incorporation is right for you, check out our article, “Should I Incorporate a Business in Canada?” 

Business Incorporation vs. Business Registration

In general, business registration is required for any business operating in Canada, regardless of whether you are a sole proprietorship, partnership, or corporation. It is also known as a “Master Business Licence” and basically allows you to do business in a specific province. For example, if you are a Canadian corporation, you need to register a business licence in each province which you do business in. Similarly, if you are a sole proprietorship in a province, you must register a business licence in that province, especially if you need to charge HST.  

A business incorporation goes a step beyond registration. When you are incorporated, you not only have a company that is registered to do business, but it also has all the benefits of a corporation noted above. It is an entity separate from you that is registered to do business.  

You can do a business name search to see if your business name is already taken, and if not, register the name in the Ontario Business Registry HERE.

For a more detailed discussion of the differences between registration and incorporation, check out our article “What is the Difference Between Registering a Business and Incorporating in Canada?”

Incorporation	Registration of a Sole Proprietorship
Limited personal liability	Unlimited personal liability
Business name protection in province and in country (if federal corporation)	No business name protection
Many tax benefits and investment opportunities	Limited tax benefits and investment opportunities
Flexibility to make changes to business structure and ownership	Difficult to change business ownership or transfer ownership
Federal Corporation requires 25% of shareholders to be a permanent resident or citizen, except Ontario and British Columbia	Founders who are not a Canadian Citizen or Permanent Resident can operate the business
Requires periodic renewals of company minute book and tax filings	Requires periodic renewals of registration
Incorporation costs are higher	Registration costs are lower
Separate taxes from owner	Same tax return as owner
Higher ongoing legal and tax maintenance costs	Lower ongoing legal and tax maintenance costs

The examples provided above are generic in nature and tax rates are approximate as of the writing of this guide. Tax results will vary widely based on individual circumstances.

How Much Does It Cost to Incorporate in Canada?

The cost to incorporate will vary depending on whether you decide to incorporate a federal corporation or a provincial corporation. This is an important decision that required you to consider  factors like your target market, need for name protection, your industry regulations, etc. For more details on the difference between federal and provincial incorporation, check out our article: “Federal Incorporation or Provincial Incorporation – Which is Better?”

Canada’s Federal Incorporation Costs

Entrepreneurs can opt for federal incorporation, which provides enhanced name protection and the ability to do business across Canada. Provincial incorporation protects your business name only in your specific province. Federal incorporation necessitates that you register your business in each province that it does business in. At least 25% of the business’s directors must be Canadian residents/citizens. However, your registered office can be anywhere in Canada.  

You should expect to spend $300-400 in government registration fees for a federal incorporation. The basic filing fee is $200, but you must also add the additional costs of the articles of incorporation filing fee and NUANS name searches/approval.  

In addition, to incorporate properly, you will need a business lawyer. Expect to spend $1000-2000 in legal fees, depending on the complexity of your business, for your business lawyer to properly create the corporation.  

Item	Cost	Total
Basic Filing Fee Incorporation	$200
Articles of Incorporation Filing Fee	$92.40
Name Pre-Approval	$16.65
NUANS Corporation Name Search Fee	$60-160
		$369.05- $439.05 +HST
Lawyer Services (including issuing shares, share structuring, minute book, business advisory, register/ledgers, ensuring compliance with Corporations Canada)	+$1000-2000	=$1369.05-2439.05 + HST

Canadian Provincial Incorporation Costs

Alternatively, entrepreneurs may choose to incorporate provincially. Provincial incorporation may be preferable if your long-term intention is to do business solely in your province. In addition, your industry regulations may require that you incorporate provincially only. For example, professionals, like architects, doctors, and accountants, incorporate their professional corporations by province. It is also usually faster.

Provincial corporation comes with disadvantages, however. Your name protection is limited to the province, meaning businesses in other provinces can use your name. Thus, if you plan to expand to other provinces in the future, you may have issues.   

You should expect to spend $300-500 in government registration fees for a provincial incorporation, depending on the province.  

In addition, to incorporate properly, you will need a business lawyer. Expect to spend $1000-2000 in legal fees, depending on the complexity of your business, for your business lawyer to properly create the corporation. Your total investment should be similar to the total investment for a Canadian federal corporation. 

Here are the associated fees for each province/territory: 

Province/Territory	Cost (CAD)*	Website Link
British Columbia	$350 + $30 name approval fee	Incorporate in BC
Alberta	$450 + $30 name approval fee	Incorporate in Alberta
Saskatchewan	$265 + $60 name search fee	Incorporate in Saskatchewan
Manitoba	$300 + $49 name search fee	Incorporate in Manitoba
Ontario	$300 + $60 name registration fee	Incorporate in Ontario
Quebec	$367 + $50 name search fee	Incorporate in Quebec
New Brunswick	$290 (includes $30 name search fee)	Incorporate in New Brunswick
Nova Scotia	$200 + $70 name search fee	Incorporate in Nova Scotia
Prince Edward Island	$255 (includes name search fee)	Incorporate in PEI
Newfoundland	$300 + $30 name search fee	Incorporate in Newfoundland
Yukon	$345 (includes name search fee)	Incorporate in Yukon
North West Territories	$300 +$25 name search fee	Incorporate in NWT

*Fees do not include legal services(see above) 

Additional Incorporation Costs

One-time Incorporation Costs

The fees noted above for federal and provincial incorporation costs are one-time fees. You will only pay the lawyer fees to incorporate plus the government’s incorporation fee once.  

However, you may need to speak to your business lawyer about other fees required for your particular business. For example, if you have business partners, you should draft a shareholders agreement. This agreement outlines the rights and responsibilities of all the shareholders (owners) and how any future disagreements are to be resolved. See our article on Shareholder Agreements.  

If your incorporation is more complex, it may involve additional fees to account for this complexity. For example, if you have a holding company, other subsidiary companies, or a family trust. Generally, these are not concerns for early stages businesses. 

There may also be a small price difference if your are incorporating a “Named company vs a Numbered company”.

Click here to learn more about the incorporation process.

Ongoing Incorporation Costs

After incorporating your company, there are ongoing yearly costs to legally maintain the status of your corporation. Failure to do this could result in penalties and the government dissolving your company. Here are the main annual costs: 

Annual Corporate Return

In Canada, corporations must file an annual return with the province or territory where they’re registered. This “Annual Return” or “Corporation Annual Report” is distinct from the corporate income tax return (T2) and serves to update public records about the company. 

The annual return typically includes: 

• Registered office and mailing addresses. 

• Names and addresses of directors and officers. 

• Business purpose. 

• Shareholder or member details, if applicable. 

The goal is to maintain accurate government records. Filing requirements and deadlines differ by location, so corporations should consult their regional business authority. The cost of filing an annual return is $12 for a federal company.  

Minute Book Compliance

A minute book is a record-keeping document that contains important corporate records, including meeting minutes, by-laws, resolutions, shareholder agreements, and other essential information about the company’s activities and decisions.  

Legally, you’ll need to keep your minute book up to date and file annual returns, which typically costs $300-500 annually.  

More on the minute book HERE.

Notice of Change Reports

Shareholder and board decisions are documented in the corporate minute book. Certain changes, like director or officer updates, should also be reported to the government through the Notice of Change.

Tax Returns

Your accountant will handle the annual corporate income tax return (T2) and GST/HST returns, with fees ranging from $500-2500 per year, depending on your business activity level.  

Please keep in mind that the initial and ongoing costs of incorporation are all tax-deductible expenses. In our experience, this normally makes incorporation worth it even for lower income companies.  

Do I Need a Lawyer to Incorporate?

We often get asked by entrepreneurs, “Should I hire a lawyer for incorporation?” Many people wrongly believe they can simply go to the government’s incorporation site and incorporate. Others are tempted by online ads, private sector firms, and incorporation retailers, like Ownr and Ontario Business Central, that promise a quick and easy incorporation for a few hundred dollars.  

So, let’s look at each of these authorized service providers: 

Cost to Incorporate Online with the Government

Incorporation involves two main steps: 

Step 1: Register Your Company 

First, you need to create and submit your Articles of Incorporation to the government. These articles provide essential information about your company, including its name, purpose, business address, and the names of your initial directors. This is the simple part.  

Step 2: Organize and Issue Shares 

This is the hard part, and involves most of the work to incorporate. This step involves preparing detailed documents with the help of a lawyer. Shareholders will then sign these documents to: 

• Define the ownership percentages and rights for each shareholder. 

• Appoint directors and officers for your company. 

• Confirm the bank, accountant, and lawyer for your corporation. 

• Create corporate by-laws. 

• Exempt directors from the obligation of preparing audited financial statements. 

• Protect directors and officers from liability. 

• Establish your company’s fiscal year end. 

• These steps are crucial for setting up and organizing your company while ensuring legal compliance and clarity in its structure. 

The issue with incorporating on the government websites is that it only completes the first step of this process! The cost for this step is outlined in the above sections as being about $300-500, depending on whether it is federal or provincial incorporation.  

Unfortunately, many entrepreneurs make the fatal mistake of thinking that once they get the confirmation of incorporation from these government sites, then they successfully created a corporation! This couldn’t be further from the truth.  

Cost to Incorporate with Online Agents/Service Providers

Instead of using government services, many entrepreneurs are tempted to just hire online agents to incorporate for them. These agents spend a lot of money to get to the top of Google rankings when you search Google for incorporations. They are not run by lawyers, but instead have a team of overseas clerks that make cooky cutter incorporation documents that are often full of errors. These companies promise cheap and easy incorporations.  

We’re here to tell you that these companies in many ways are a worse alternative to just filing yourself on the government website (Step 1). You should avoid these online services for these reasons: 

Online Incorporation Services are Incomplete

Usually, all these online agents really do is charge you a fee to make the government filings online (Step 1). That’s right, they are charging you extra to do something you can easily do yourself! These services don’t tell you about Step 2, because Step 2 is the hard part, involving the most work from someone who understands the law – a business lawyer. You pay them but still don’t have a proper incorporation!  

So, it’s easy to see why these online services are going to be cheaper than hiring a business lawyer! It’s like buying a book 90% off but 90% of pages are missing. Or getting a 90% discount on a haircut but only 10% of your head is cut. You need to compare similar services. With online services, you pay 10% of the normal cost but get 10% of the work completed. 

Beware of Online Agents: Too Many Errors

Many clients we assist at DiMinno Rizzi initially opt for online incorporation services. However, our business lawyers often find significant errors in their documents that can lead to legal and tax complications. Correcting these mistakes can be costlier than starting with our firm from the beginning. It’s crucial to get it right the first time to save both time and money. 

Consequences of Improper Incorporation

If you incorporate yourself, or worse, using an online agent, you are risking a lot. You risk no limited liability, losing company assets, and issues with the CRA and government audits. Most incorporations lawyers do is fixing companies incorporated online. It’s better to start the right way with a lawyer. You need the full package to properly create a corporation. 

You Will Get a Better Deal with a Lawyer

When you incorporate with a business lawyer, not only is the job done right, but you get far more value for your money. For example, our business lawyers will provide you with a free strategy session to determine if incorporation is the best structure for you. If it is, we provide specialized legal and business advice on your industry, the best corporate structure for you, how to maximize tax savings, any agreements you may need for your business and more. If you have business partners, we will advice on whether you should have a shareholders agreement (See : “An Entrepreneur’s Guide to Shareholder Agreements”). These services are often included in our incorporation price. 

How an Incorporation Lawyer Can Help

When considering incorporation, a crucial first step is to speak to an incorporation lawyer.

At DiMinno Rizzi Lawyers, we offer free consultations to learn about your business and discuss whether incorporation is the best decision for you. We’ll work closely with you to help clear the fog and ensure that your company is sailing in the right direction!

Disclaimer: All number figures are approximate only and may be subject to change. Like all material on this website, this is not financial, legal, or tax advice. Contact a professional for your specific situation. 

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