I've been reading up about this - why do companies setup provincial corps when they could be setting up federal corps (as in, it costs $100 more and there seem to be no downsides last I checked)?
Also, how do you manage taxes? (especially for revenue earned from other countries for example).
I see federal incorporation as a "sane default" but this is what I know that favours provincial incorporation:
- The bureaucratic details differ between the various provincial jurisdictions and the federal one (like the one I mentioned with requirements for the makeup of the board). This could make a particular province's corporate rules a better fit for your business than the federal ones.
- That provincial incorporation is cheaper can matter for local businesses that have no intention of expanding nationally.
- Some provinces may require corporations from other jurisdictions (other provinces or the federal jurisdiction) to "register extraprovincially" to operate there, at extra cost. This is avoided by incorporating locally.
- If your business name is already taken by a provincial corporation in another province, you may have an easier time creating a provincial corporation by the same name than a federal one.
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> obligatory "I'm not an accountant or tax expert" note
Taxes... I'm still figuring those out but CRA allows corporations to file in USD [1]. To the best of my knowledge, a Canadian corporation that only has Canada-resident employees and shareholders, and doesn't own property or servers in other countries, only has to deal with Canadian taxes. Expect to fill out a few W-8BEN-E forms to assert this. Depending on what your company does, you may have to charge your Canadian users sales tax.
Also, how do you manage taxes? (especially for revenue earned from other countries for example).