Whether you incorporate your business federally or provincially, the results are similar.   Both federally and provincially incorporated businesses, for instance, must register in each province where they intend to do business. However, there are differences between federal and provincial incorporation.  These differences, though they seem subtle, are important.

Extra-Provincial Licences and Name Registration - Federal Corporations:  In general, a federal corporation is entitled to use the same name to carry on business anywhere in Canada, subject only to the licensing and registration requirements (if any) of the province where business is done. The fees per province range from $200 to $500 to register extra-provincially with the exception of Ontario where it is free to register, however the registration must still be filed.

Extra-Provincial Licences and Name Registration - Ontario Corporations:  In general, an Ontario corporation is entitled to carry on business in Ontario under its corporate name, and needs an extra-provincial licence to do business in another province. To do business in another province, business name registration is also usually required.

Approval of Corporate Name:  The onus is on the incorporator to ensure that the corporate name complies with the applicable provincial and/or federal laws. The Ontario government will not initially reject any corporate name proposed as long as there is not an exact match and a Nuans search is conducted.  The onus is on the incorporator to make sure their name is not confusingly similar to other names and that it complies with the law.  On the other hand, the federal government (Industry Canada) pre-screens all proposed corporate names.  There is a high rejection rate which often results in the need to pay for multiple Nuans search reports.  It should be noted that although Industry Canada calls their screening process a name approval (or Name Decision) they actually will allow you to use a name only if you assume full responsibility for any risk of confusion with existing business names and trade marks.  In effect they either reject your name or state they have no reason to reject your name.  A favourable Name Decision does not necessarily mean your name is satisfactory from a legal standpoint.  It just means that it was not rejected based on their criteria and the information they had access to at the time they rendered their decision.

Use of Corporate Name:  If your business is an Ontario corporation, you are free to do business in Ontario without any additional registration of your name.  If you do business in another province, you're generally required to register your name with that province.  The other province decides whether or not you may do business there under that name.  If you are a federal corporation, you are entitled to use your corporate name in any province in Canada. However, you may still be required to meet other provincial requirements, in terms of such issues as registration, taxation, and reporting.

Annual Filings:  An Ontario corporation is required to file a combined Corporation Tax and Annual Return every year. This includes the corporate information on directors, officers, and other people connected with the corporation. There is no charge for this filing. A federal corporation must annually file a Corporation Tax Return, and a Corporate Information Return.  These two federal documents are separate from each other. The fee for the Corporate Information Return is $20 to $40 depending on method of filing.  A federal corporation based in Ontario must also annually file with the Ontario government. For most small businesses, this filing is very simple, and there is no charge for it.