Incorporate in Canada: Federal (CBCA) or Provincial Corporation Guide

To incorporate in Canada you choose between a federal corporation under the Canada Business Corporations Act (CBCA) and a provincial corporation under a provincial statute, then register the new company with the Canada Revenue Agency (CRA) and with every province where it does business. The choice changes who can sit on the board, how names are cleared and what the government fees are. It does not change the federal income tax rates, which depend on the type of corporation and on where the income is earned. This guide is for owners and founders setting up a first Canadian company in 2026, including U.S. and India-linked owners.

Federal or provincial: how do you choose?

Both routes create a separate legal person that can own assets and sign contracts. The differences are in the details.

Founders who expect to trade in several provinces often prefer a federal corporation, while owners with one location and Canadian directors usually find a provincial corporation simpler. Neither choice removes the need to register elsewhere. Alberta requires a corporation formed in another province or country to register before it does business there, and Ontario requires registration through its business registry if you have employees, facilities or offices in the province. A Canadian lawyer should confirm which statute suits your shareholder agreement; this page is not legal advice.

Who can be a director or shareholder?

Under CBCA section 105 a director must be an individual, at least 18 years old, not found incapable and not a bankrupt. The residency rule is the one that surprises non-resident founders: at least 25% of directors must be resident Canadians, and where there are fewer than four directors at least one must be. Some regulated sectors require a majority. Provincial statutes have their own residency rules, so a company with only non-resident directors needs a specific check against the statute you choose.

Share ownership has no residency test in corporate law, but it matters for tax. A CCPC must be private, resident in Canada and not controlled, directly or indirectly, by non-residents. Control by non-residents means no CCPC status and no small business deduction; see our small business deduction guide.

How to incorporate in Canada, step by step

1. Pick the jurisdiction and share structure. Federal basic incorporation is pre-packaged with one or two classes of shares and up to 10 directors; custom articles let you set your own structure.
2. Choose a name. A numbered name is the simplest, because the registry assigns the number. For a word name, order a NUANS name search report. Ontario needs an Ontario-biased report and will not accept a federal-biased search. Alberta needs a report less than 91 days old. In British Columbia the $30 name request takes roughly 7 to 14 days (priority service is $100) and the reservation lapses after 56 days.
3. Prepare the articles in the form your registry requires.
4. Set the registered office and the first directors. Federally you list each director's name, address and whether they are a resident Canadian. Alberta also requires a physical registered office in the province and an agent for service who lives there.
5. Identify individuals with significant control. Federal filers supply this during incorporation; see our guide to corporate annual returns and registers.
6. File and pay. Use the Online Filing Centre, the Ontario Business Registry, BC Registries or your Alberta registry agent.
7. Organize the corporation. Directors meet on at least five days' notice, adopt bylaws that shareholders confirm at the first shareholders' meeting (which must be called within 18 months), issue shares only after full payment, appoint officers and open the bank account.
8. Register with the CRA as described below.

Documents and information to gather

• Proposed corporate name and the NUANS report, or the decision to use a number name.
• Full name, residential address and residency status of every director.
• Registered office address where records are kept.
• Share classes, the number of shares and the subscribers.
• For each individual with significant control: name, date of birth, citizenship, tax residence and residential address.
• Valid identification, an email address and a payment card.

Business number and program accounts

The CRA issues one nine-digit business number (BN) per business, and each program account adds a two-letter code and reference number to it. Most new companies need the corporation income tax account (RC), a GST/HST account (RT) once taxable sales pass the $30,000 small-supplier line, and a payroll account (RP) before the first paycheque. Import-export (RM) is for importers and exporters. Since November 3, 2025 new registrations must be done online. Our CRA My Account and business number guide covers the portals, and the GST/HST guide and payroll guide cover the other two accounts.

Worked example: a Toronto and Naperville software company

Priya lives in Naperville, Illinois and Marcus lives in Toronto. They form a software services company owned 60% by Priya and 40% by Marcus. With two directors, at least one must be a resident Canadian under the CBCA; Marcus qualifies and Priya can serve as the second director. Because Priya holds the majority of the votes, the company is probably controlled by a non-resident and is not a CCPC, so its active business income is taxed at the general rate. Shifting control to Canadian residents changes that result but also changes ownership, so take legal and tax advice first. Either way the company files a T2 return every year, even in a year with no income.

Mistakes to avoid

• Appointing a non-resident as the only director of a CBCA corporation.
• Assuming a federal charter replaces provincial registration where you operate.
• Confusing the annual return with the tax return. Corporations Canada says the annual return is not the corporation's tax return, which goes to the CRA; see our T2 corporation return guide.
• Issuing shares before they are fully paid for.
• Waiting until the first payroll day to open the payroll account.

A note for U.S.- and India-linked owners

A U.S. citizen, green card holder or U.S. resident who owns a meaningful part of a Canadian corporation usually has U.S. information reporting on top of the Canadian filings; our foreign business reporting guide explains the forms. An Indian resident putting money into a Canadian company should ask their Chartered Accountant how the overseas investment is reported; our India entity options page and India-Canada business structures guide show how the two sides fit together. If a foreign parent is entering Canada, read the pages for a U.S. company entering Canada or an Indian company entering Canada.

How we can help

We are a U.S. CPA firm in Aurora, Illinois. We handle the U.S. side of a Canadian incorporation, including entity classification and information returns, and we coordinate with your Canadian lawyer, Canadian CPA and Indian Chartered Accountant so the three sets of filings agree. See our business formation and registrations and bookkeeping and accounting services. For the full Canada section, start at Canada: tax and compliance.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.