The Federal Corporation Advantage

Depending upon the nature of your business, you may achieve several advantages by incorporating federally. A principal advantage to federal incorporation is that the name of your corporation will be protected across Canada. Once your corporation has been federally incorporated, no newly formed corporation will be able to use that name or a name that is similar to the point of being confusing. This is true even for corporations that are themselves only incorporating provincially.

This advantage can be very important if you initially plan to operate your company across the country, or may want to later expand your business out of the province where you originally commence operations. If you have only incorporated provincially and want to expand your business into another province, you may have to incorporate in the second province as well. If there is a provincially incorporated company in the other province with a similar name, you may not be able to incorporate your company under the same name in both provinces. To avoid this problem, it is often prudent to just incorporate your company federally in the first instance.

It should be noted that there is one drawback to the country wide protection offered by federal incorporation. When initially naming your corporation, the name you choose cannot be similar to the name of any other corporations in the country, even if these corporations are themselves only incorporated provincially. While this can make it more difficult to acquire your preferred name, it is still usually a preferable scenario to being unable to expand your corporation under the same name.

Another less significant advantage associated with incorporating federally is that the registered office of your corporation may be located anywhere in Canada. This is in contrast to provincial incorporation, where your registered office must be in the province of incorporation.

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