Incorporation creates a distinct legal entity separate from its owners (shareholders).
The extended liability protection is one of the main reasons that businesses choose incorporation. Theoretically, no member of the company can be held personally liable for the debts, obligations, or acts of the company. A shareholder is only liable for the unpaid portion of shares owned.
Incorporation may be done provincially, giving a company the right to operate under its corporate name in a particular province. Federal incorporation gives a company the right to operate under its corporate name throughout Canada.
If you choose federal incorporation you need to go through the procedure of incorporation through Corporations Canada. (Corporations Canada administers the CBCA (Canada Business Corporations Act). There are offices in Vancouver, Ottawa, Montreal, and Toronto.) You can incorporate your business online, or get the forms you need to file as part of the incorporation process by automatic fax, Internet or mail. If you choose provincial incorporation, you need to contact the appropriate Provincial Registrar. Some of these have Web sites which offer online provincial incorporation.You'll find links to the incorporation forms needed in various provinces and step-by-step articles about incorporation in my Incorporation Canada library. There are also companies that offer incorporation services, both federal and provincial.
