The short answer
If you will operate mainly in Ontario, an Ontario corporation is usually simpler and cheaper. If you plan to operate in several provinces early on, or want the federal framework for other reasons, a federal corporation may fit better. Neither is better for everyone, and a federal corporation still has to register in each province where it does business.
Side-by-side comparison
| Item | Ontario (OBCA) | Federal (CBCA) |
|---|---|---|
| Government fee, online | $300 | $200 |
| Typical speed online | Immediate once filed | About one day |
| Name report | Ontario-biased NUANS | NUANS report for a named company |
| Director residency | No requirement | 25% resident Canadians |
| Annual return | $0, within 6 months of fiscal year-end | Within 60 days of the anniversary date |
| Filed through | Ontario Business Registry | Corporations Canada |
Cost and filing
The Ontario government fee is $300 and the federal fee is $200 when you file online. The fee is only part of the cost. Professional help, a minute book, the business number and any extra-provincial registrations add to it. Our business registration packages start at $499 for Ontario and $799 for federal, and the federal package includes extra-provincial registration in Ontario.
Name protection and NUANS
If you want a named company (not a numbered one), you need a NUANS name search report. For an Ontario corporation, the report must be Ontario-biased, and a federal-biased report is not accepted. A numbered company does not need a NUANS report, though most operating businesses want a real name.
Passing a NUANS search does not guarantee approval, because the registry also checks for confusing similarity. A corporate name is also not the same as a trade name or trademark. If your brand matters, consider a trademark search as a separate step.
Where you can operate
An Ontario corporation is created under Ontario law, but it is not limited to Ontario. It can carry on business in other provinces if it registers extra-provincially there. A federal corporation can use its name across Canada in principle, but it also needs to register extra-provincially in each province where it carries on business. Fees and rules vary by province, so check each one.
That means federal incorporation does not remove provincial paperwork. A common mistake is assuming a federal charter lets you work in every province without registering there.
What stays the same either way
The choice does not change the basics. Both types of corporation are separate legal entities with limited liability for shareholders, and both can qualify as a Canadian-controlled private corporation, which matters for the small business deduction and for credits such as SR&ED. Either way you file a T2 corporate income tax return with the CRA each year, and you still need a registered office, at least one director and a register of individuals with significant control.
Which law you choose mostly affects director rules, the registry you deal with, name searches and how you register in other provinces. It rarely changes your tax result on its own.
Director residency
Ontario repealed its resident Canadian director requirement on July 5, 2021, so an Ontario corporation can have non-resident directors. The CBCA still requires at least 25% of directors to be resident Canadians. If a federal corporation has fewer than four directors, at least one must be a resident Canadian. Corporations in some prescribed sectors need a majority of resident Canadian directors.
This matters for newcomers and non-resident founders. If you or your partners are not yet residents, Ontario may be easier. See our newcomer business page for context.
How to choose
- Choose Ontario if you operate mainly in Ontario, want the simplest setup for an Ontario-only business, or have directors who are not residents of Canada.
- Choose federal if you have enough resident Canadian directors, expect to expand across provinces and are willing to register in each one.
- Talk to an advisor if you have investors, plan to raise capital or work in a regulated sector.
Switching later
You are not locked in forever. A corporation can generally continue from one jurisdiction to another, for example from Ontario to federal, but it takes filings, fees and sometimes shareholder approval. It is cheaper to choose with your three-year plan in mind than to convert after your first financing or your first out-of-province contract.
After you incorporate
- Issue shares and set up the minute book with directors' and shareholders' resolutions.
- Register for a CRA business number and the accounts you need, such as GST/HST and payroll.
- Open a business bank account with your incorporation documents.
- Register extra-provincially wherever you carry on business outside your home jurisdiction.
- Set up bookkeeping and note your annual return, T2 filing and HST dates.
Our HST/GST registration guide and T2 corporate tax return guide cover the next two filings, and the newcomer startup guide gives the wider picture. If you want help, contact us.
Official sources: register your business online in Ontario, the Ontario Business Registry and Corporations Canada federal incorporation.