Because the laws governing business operations in Canada are different than in the U.S., it’s also natural that many U.S. companies will want to have a separate Canadian entity to protect their business operations there.

Federal or Provincial

Initially, you will need to decide whether you want to file as a federal or a provincial corporation.Canada places far more emphasis on name and brand recognition and more legal protections for a name than in the U.S.So choosing your organization’s name and the level of filing is an important part of the process. A number of websites provide forms and instructions for incorporating in Canada, but be sure to connect with the actual province in which you plan to conduct business to be sure that all forms comply with their requirements.

When you incorporate your business in a particular province or territory, you are entitled to operate your business in that province, and you will have no name protection outside that province or territory.However, if you wish to expand into other territories, it is fairly easy and inexpensive to do so.

Federal incorporation gives your business increased business name protection and wider rights to carry on business.Federal incorporation of your business means that you will be able to do business anywhere in Canada under your chosen business name, even if some other company is already using a similar name.The advantages are an extra level of perceived status and legal protection; the disadvantages are increased paperwork and higher fees.

Research both opportunities and decide which option is right for you.If you are a boutique business producing hand knit goods in Washington State and you want to expand into British Columbia, a provincial filing will be adequate, less expensive and less work in the long run.If your firm is a major retailer looking to expand into several metropolitan markets in Canada, then the additional fees and paperwork will seem minimal compared to the opportunity.

Get a Canadian Business Number

Similar to the U.S. Federal Employer Identification Number (FEIN), Canada requires that businesses apply for a Business Number (BN) or, when operating in Quebec, a Numérod’Entreprise du Québec—inEnglish, a Quebec Enterprise Number (NEQ).

Your BN is a 15-digit number that identifies your business. It actually has two parts; a 9-digit number that identifies your business, and a 6-digit portion composed of letters and numbers that identifies your particular tax account. The 9-digit number never changes; the second part of the BN may change depending on which tax account the number refers to.Any business may claim several different business entities under the same BN account, hence the variation in the second part of the number.

With the exception of Quebec, your BN will cover your responsibilities for a variety of sales taxes, depending on the province or region in which your corporation is operating.

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