Federal Incorporation in Canada, Done Yourself

This is written for the most common Canadian small-corporation scenario: a couple, at least one of them resident in Canada, forming a company to run a digital services business — web and digital design work billed to clients, plus revenue from selling digital documents, templates, and downloads through their own site.

That specific mix matters more than it looks. Services revenue and digital-product revenue are treated differently for sales tax, differently for income-splitting rules, and differently again for US and EU tax exposure. The structure decisions below are shaped by that split, and several of them are effectively irreversible once the first fiscal year closes.

Federal incorporation under the Canada Business Corporations Act gives you one corporation that can operate in all thirteen provinces and territories, with your corporate name protected nationally rather than in a single province. It is also, counter-intuitively, the cheapest option to file.

The decision, simplified

Choose federal if at least one director is resident in Canada, if there is any chance you relocate provinces, or if the brand name matters enough to want national protection. Choose provincial if no director is resident in Canada (Ontario and BC removed their residency requirements, so they remain open to fully non-resident boards), or if you are certain the business will never leave one province and you want the absolute minimum number of registries to maintain.

For the scenario in this guide — one Canadian-resident spouse, one Canadian national — federal is the stronger choice. The residency requirement is satisfied by a single director, and the CAD 200 fee undercuts every province.

Every one of these is free to get right on the incorporation form and expensive to change afterwards. Work through them before you open the filing centre.

Steps 1–7 can all be done in a single afternoon. Steps 8–14 run in parallel over the following two to four weeks, gated mainly by how fast your bank moves.

1. 1

   Decide named or numbered corporation

   1 hourCAD 0

   A numbered corporation (e.g. 15234567 Canada Inc.) is free, instant, and carries zero name-rejection risk. A named corporation gives you the brand on the legal entity itself. For a design studio, the practical answer is usually: incorporate as a numbered company, then register your brand as an operating (trade) name provincially and use it everywhere. That decouples the legal shell from the brand — useful if you later rebrand, since changing a corporate name means filing Articles of Amendment (CAD 200).

   If you do want a named corporation, the name must have three parts: a distinctive element, a descriptive element, and a legal ending (Inc., Corp., Ltd., Limitée). Corporations Canada now runs the name search inside the online incorporation application, so a separate Nuans report is no longer a mandatory pre-step for most online filings. You can still buy one (about CAD 13.80 from a search house, valid 90 days) if you want to see the conflict list before you commit.

2. 2

   Confirm at least one director is a resident Canadian

   30 minCAD 0

   Under CBCA s.105, at least 25% of directors must be resident Canadians — and where the board has fewer than four directors, at least one must be a resident Canadian. This is statutory. It cannot be waived, and it cannot be papered around with a contract.

   “Resident Canadian” means a Canadian citizen ordinarily resident in Canada, a permanent resident ordinarily resident in Canada, or a citizen abroad who falls in a narrow prescribed class. A Canadian citizen who lives outside Canada generally does not count.

   Your case

   One spouse living in Canada satisfies the requirement on their own as sole director, or as one of two directors. The second spouse’s residency only matters for the board if they are the only other director and the Canadian-resident spouse resigns.

3. 3

   Fix your registered office and records address

   30 minCAD 0–300/yr

   You must name a province for the registered office and give a physical civic address in it. A PO box is not accepted. A home address is legal and free — but it becomes a matter of public record on the Corporations Canada database, searchable by anyone. If that matters, a registered-office/mail-forwarding address runs about CAD 150–300 per year.

   The province you name here drives everything downstream: which provincial registry you file with, which corporate tax rate applies, and which sales tax you charge Canadian customers. Choose the province you genuinely operate from.

4. 4

   Design the share structure — before you file, not after

   2–3 hoursCAD 0

   The Articles of Incorporation define your share classes. Setting up several classes at incorporation costs nothing. Adding them later requires Articles of Amendment at CAD 200 plus, realistically, a lawyer to draft the share provisions. Do it now.

   A conventional flexible structure for a two-person operating company: Class A voting participating common, Class B non-voting participating common, Class C non-voting redeemable preferred (for future freezes or dividend flexibility). Keep the number of authorised shares unlimited with no par value — the Canadian default.

   Do not issue shares to a non-resident majority

   A Canadian-Controlled Private Corporation (CCPC) is what unlocks the 9% federal small business rate, the enhanced SR&ED credit, and the lifetime capital gains exemption. Control by non-residents breaks CCPC status. If one spouse lives outside Canada, keeping their holding at or below 50% of the votes protects it.

5. 5

   File Articles of Incorporation online

   20–40 minCAD 200

   File through the Corporations Canada Online Filing Centre. CAD 200 online, CAD 250 on paper — there is no reason to file on paper. Online filings are typically processed within one business day; many come back the same day.

   You will enter: corporate name or numbered request, registered office address, share structure, any share transfer restrictions, number of directors (a fixed number or a min/max range — use a range, it saves an amendment later), director names and addresses, and any restrictions on the business the corporation may carry on (leave unrestricted).

   You receive a Certificate of Incorporation, your corporation number, and a Corporation Key. The Corporation Key is what lets you file changes online — store it in your password manager the day you get it. Replacing a lost key is a manual, slow process.

6. 6

   File your Individuals with Significant Control (ISC) information

   30 minCAD 0

   Since 22 January 2024, CBCA corporations must file ISC information with Corporations Canada — at incorporation, annually with the annual return, and within 15 days of any change to the register. Separately, you must maintain the ISC register in your own records.

   An ISC is anyone holding, controlling, or directing 25% or more of voting shares or of fair market value — or anyone with de facto control. In a two-person company, both of you will almost certainly be ISCs.

   This one has teeth

   Non-compliance carries fines up to CAD 1,000,000 and up to five years’ imprisonment, and Corporations Canada can administratively dissolve a corporation that fails to file. It is a fifteen-minute filing. Do not skip it.

7. 7

   Hold the organisational meeting and build the minute book

   2–4 hoursCAD 0–500

   Incorporation creates the shell. The organisational resolutions make it a functioning corporation. You need, at minimum: adoption of by-laws, appointment of officers, appointment (or waiver) of an auditor, issuance of shares to the founding shareholders in exchange for stated consideration, approval of the share certificates, setting the financial year-end, and authorising a bank account.

   Keep these in a minute book alongside the certificate, articles, by-laws, share register, directors register, and ISC register. A DIY minute book from templates is free; a lawyer-prepared one runs CAD 500–1,200. Banks, Stripe reviewers, buyers, and the CRA all eventually ask to see it.

   Pick your year-end deliberately

   Your first fiscal year can be any period ending within 53 weeks of incorporation. A year-end a few months before your personal tax deadline gives you room to decide the salary/dividend mix with actual numbers in hand. Many owner-managed corporations choose a non-December year-end for exactly this reason.

8. 8

   Register provincially where you carry on business

   1–2 hoursCAD 0–560

   Federal incorporation gives you the right to operate nationwide, but each province still wants you on its register. What that costs varies enormously — see the full cost breakdown.

   Province	What a federal corp files	Government fee	Deadline
   Ontario	Initial Return under the Corporations Information Act (Ontario Business Registry)	CAD 0	Within 60 days of starting business in ON
   British Columbia	Extraprovincial registration + name approval	CAD 380	Before carrying on business
   Alberta	Extra-provincial registration via a registry agent	≈ CAD 275 + agent fee	Before carrying on business
   Quebec	Immatriculation with the Registraire des entreprises	Varies + annual fee	Within 60 days
   Nova Scotia	Registration (filed by mail)	CAD 274.10	Before carrying on business
   Newfoundland & Labrador	Registration (filed by mail)	CAD 560	Before carrying on business

   Ontario, Nova Scotia and Newfoundland & Labrador can be handled inside the federal online incorporation flow. Note Ontario does not require an extra-provincial licence for a CBCA corporation — that requirement applies only to corporations formed outside Canada.

   For a remote design studio, “carrying on business” in a province generally follows where you have an office, staff, or a physical presence — not merely where a client happens to sit. Selling a template to someone in Halifax does not make you carry on business in Nova Scotia.

9. 9

   Get your CRA Business Number and program accounts

   30–45 minCAD 0

   Use Business Registration Online (BRO). Since 3 November 2025 the CRA no longer opens business numbers or program accounts by phone, so BRO is the route. Registration is free and the BN is issued in the session.

   • RC — corporation income tax (usually created automatically from the federal incorporation)
   • RT — GST/HST (see step 10)
   • RP — payroll deductions (open this before the first paycheque, not after)
   • RM — import/export (only if you physically import goods; not needed for digital delivery)

   Register for CRA My Business Account at the same time. Almost every later filing — GST/HST returns, payroll remittances, T4s, instalments — runs through it.

10. 10

    Decide on GST/HST registration

    30 minCAD 0

    Registration is mandatory once worldwide taxable revenue exceeds CAD 30,000 in a single calendar quarter or across four consecutive quarters. Two traps for a business like yours:

    • The threshold is worldwide, not Canadian. Zero-rated exports to US clients still count toward the CAD 30,000.
    • Once you cross it, you must register within 29 days of the sale that pushed you over — the clock is short.

    Voluntary early registration is usually the right call for a studio: your Canadian B2B clients recover the tax in full, your US clients are zero-rated so charge nothing extra, and you immediately claim input tax credits on hardware, software subscriptions, and startup costs. The trade-off is quarterly or annual filing discipline. Full detail in the sales tax guide for digital businesses.

11. 11

    Open the corporate bank account

    1–3 weeksCAD 0–30/mo

    Bring the certificate of incorporation, articles, by-laws, the banking resolution, the share register, ID for every signing officer, beneficial-ownership details for anyone at 25% or more, and your business number. Banks are required to collect the beneficial ownership information — having it ready in the minute book turns a two-visit process into one.

    Open a CAD account and a USD account from day one. If a meaningful share of revenue is American, receiving USD into a USD account and converting deliberately beats paying an embedded conversion spread on every single transaction.

    Big-Six business plans run roughly CAD 6–30 per month for limited transaction counts. Fee-free options exist (BMO eBusiness, EQ Bank Business, and several fintech accounts) — but confirm your chosen provider is accepted as a Stripe payout destination before you rely on it.

12. 12

    Set up Stripe

    1–3 days2.9% + CAD 0.30

    Stripe verifies your legal name and address against the federal and provincial registries, and checks the directors you enter against the registry record. The single most common cause of a stalled Canadian onboarding is a mismatch — using the brand name where the legal name belongs, or listing one director when the registry shows two.

    Standard Canadian pricing is 2.9% + CAD 0.30 per successful domestic card charge, plus 0.8% for internationally-issued cards and 2% for currency conversion. See the Stripe setup guide for the full document checklist and the tax-collection settings that matter when you sell digital documents.

13. 13

    Put the paper in place before the first client

    3–5 hoursCAD 0–1,500

    Contracts are what stop a design studio from being reclassified as an employee arrangement, and what stop disputes over who owns the artwork:

    • Master services agreement with a clear IP assignment clause — under Canadian copyright law, a contractor owns their work unless it is assigned in writing
    • Moral rights waiver — separate from assignment in Canada, and easy to forget
    • Licence terms for digital documents and templates (personal vs commercial vs extended use)
    • Terms of service and refund policy — Stripe expects a published refund policy for digital goods
    • Privacy policy meeting PIPEDA, plus Quebec's Law 25 if you have Quebec customers
    • CASL-compliant consent for any marketing email — Canadian anti-spam penalties are severe
14. 14

    Calendar the recurring filings

    30 minCAD 12/yr

    Put these in a calendar now, with reminders, because nothing prompts you later:

    • Corporations Canada annual return — CAD 12, due within 60 days of the anniversary of incorporation (this is NOT your tax return)
    • ISC information — filed with the annual return, and within 15 days of any change
    • T2 corporate return — due 6 months after fiscal year-end; balance due 3 months after year-end for a CCPC claiming the small business deduction
    • GST/HST returns — quarterly or annual, per your assigned filing frequency
    • T4/T5 slips — by the last day of February for the preceding calendar year
    • Provincial annual report where applicable (e.g. BC, CAD 43.39)

    The annual return is the one people miss

    Repeatedly failing to file the CAD 12 annual return leads to administrative dissolution. Reviving a dissolved corporation costs more, takes longer, and creates awkward gaps in your banking and contracts.

Ontario is the cheapest province in which to land a federal corporation, and the one most often misquoted. Here is the whole provincial and municipal layer.

Municipal and zoning

Most Ontario municipalities licence only specific business categories — food, personal services, automotive, entertainment, public vehicles. A home-based design studio generally falls outside them and needs no municipal business licence. What does apply is the home occupation provision in the local zoning by-law, which typically limits the floor area given over to the business, restricts non-resident employees working on site, and controls signage, parking, and client visits.

Zoning by-laws are actively being rewritten across the Greater Toronto and Hamilton Area, so confirm the current home occupation rules with your municipality rather than relying on an older handout. It is a single phone call and it is the one item on this list a landlord, insurer, or neighbour complaint can turn into a real problem.

This is the part that DIY incorporations most often get wrong, and it is worth more money than every filing fee in this guide combined.

The tax on split income problem

Paying dividends to a spouse who is not materially involved in the business triggers the tax on split income (TOSI) rules, which tax those dividends at the top marginal rate — eliminating the benefit entirely. There are exceptions, but one of the most useful is closed to you by default.

The excluded shares exception normally protects a shareholder aged 25 or over who holds at least 10% of both votes and value. But it requires that less than 90% of the corporation’s gross business income comes from the provision of services. A web and digital design studio is close to 100% services income, so the exception is unavailable.

The exceptions that work regardless

• Excluded business — the spouse works an average of 20+ hours per week in the business during the year. Clean, defensible, and it permanently protects dividends once met over any five prior years. Keep contemporaneous time records.
• Reasonable salary — TOSI does not apply to employment income at all. A salary for genuine work performed is deductible to the corporation and creates RRSP room and CPP credits. It must be reasonable for the work actually done.
• Reasonable return — for a spouse aged 25+, dividends reflecting a reasonable return on labour, capital, and risk contributed. CRA guidance on 'reasonable' is thin, which makes this the least predictable route.

The personal services business trap

If the corporation effectively serves one client who controls when and how the work is done, the CRA can treat it as a personal services business. The consequences are severe: no small business deduction, a 33% federal rate, and deductions limited to remuneration paid to the incorporated employee and legal costs of collecting revenue — no software, no equipment, no home office.

A design studio with multiple clients, its own tools and premises, its own branding, control over scheduling, and the right to subcontract is not a personal services business. Keep it that way deliberately: maintain more than one client, invoice on deliverables rather than hours where you can, and keep the written contracts consistent with genuine independence.

The full breakdown — including province-by-province registration fees, year-two running costs, banking, Stripe processing, and where DIY genuinely stops being the cheaper option — is in the detailed cost guide.

• Filing a single class of common shares. It works until the day you want dividend flexibility, an estate freeze, or an investor — then it is an amendment plus legal drafting.
• Losing the Corporation Key. It arrives once, in the incorporation confirmation, and every online change filing needs it.
• Skipping the ISC filing. Up to CAD 1,000,000 in fines and administrative dissolution, for a form that takes fifteen minutes.
• Treating the CAD 12 annual return as the tax return. They are different filings to different agencies with different deadlines.
• Paying spousal dividends without checking TOSI. The assessment arrives years later with interest attached.
• Registering for GST/HST late. The obligation starts at the sale that crosses CAD 30,000, and you owe the tax whether or not you collected it.
• Entering the brand name into Stripe where the legal name belongs. Verification fails against the registry and payouts freeze.
• Mixing personal and corporate money. It undermines the corporate veil and turns bookkeeping into forensic work.
• Not assigning IP in writing. Under Canadian copyright law the contractor owns the work absent a written assignment — including work your own subcontractors produce for your clients.