Written by Mohamed Barre
JD Candidate 2026 | UCalgary Law

That spark of an idea, the vision of your own business – it's exhilarating! But then reality hits: incorporation. Suddenly, you're navigating a maze of provincial vs. federal, ABCA vs. CBCA, and a mountain of forms. Feeling overwhelmed? You're not alone. Choosing the right incorporation path is crucial, and today, we're cutting through the confusion. Let's break down the differences between incorporating federally vs. provincially, focusing specifically on the provincial process here in Alberta, and  get you one step closer to launching your dream.
To start, the processes for incorporating under the ABCA and CBCA are substantially similar. In Alberta, the process of incorporation is set out in Sections 5-14 of the ABCA. The ABCA requires three documents:[1]

1. Articles of Incorporation,
2. Notice of Address, and 
3. Notice of Directors. 

Each document must comply with the ABCA. Once the documents and a Newly Upgraded Automated Name Search (NUANS) report are filed with Service Alberta or an accredited registry agent, the information will be vetted for compliance with the ABCA. A NUANS report is used to establish that there are no other corporations with an identical or similar name as your proposed corporation name. Additionally, if the corporation were to conduct business in another province, the corporation would need to incorporate extra-provincially in said province. 
Prescribed incorporation fees must also be paid before a certificate of incorporation is issued.[2] Furthermore, pursuant to section 20.1(1) of the ABCA, all corporations are required to: 

• Appoint an agent for service who is a resident Albertan 
• Provide the Registrar with a notice of appointment of its agent for service, together with articles of incorporation 
• Ensure that the address for its agent for service is an office that is accessible to the public during 

The process for federal incorporation is similar to the ABCA and is set out in Sections 5-13 of the CBCA. Federal incorporation also requires filing Articles of Incorporation, Notice of Address, and Notice of Directors.[3]  Under the CBCA, at least twenty-five percent of the directors of a corporation must be resident Canadian. However, if the corporation has less than four directors, at least one must be a resident Canadian. Furthermore, the corporation will also be required to incorporate extra-provincially in the provinces where it conducts business.

1. Fees The cost of provincial incorporation is $275.[4] The cost of federal incorporation is $200 for online applications or $250 for paper applications.[5] Both carry additional fees such as a $45 NUANS report, and a registrar service fee or if using a law firm to incorporate then the fees of their services. 
While incorporating a federal corporation is comparatively less costly in terms of incorporation fees, federal corporations are also required to extra-provincially register in the provinces in which they will carry on business. The definition of “carry on business” triggering the registration requirement encompasses running a business, having an address, post box or phone number, or offering products and services for a profit.[6] This is an additional cost consideration for a business seeking to incorporate federally. The fee to register an extra-provincial corporation in Alberta is $275 plus service fees.[7] 

2. Address The ABCA requires a business to have its registered office in Alberta.[8] The requirement to have a registered office in Alberta is not satisfied by merely having a post office box in Alberta.[9] The requirement is a physical address in Alberta accessible during normal business hours.[10] The ABCA requires shareholder meetings to be held in Alberta unless all shareholders entitled to vote at the meeting agree to hold it outside of Alberta, or if the articles so provide.[11]
The CBCA allows a federally incorporated business to have a registered office and hold annual meetings in any province in Canada.[12]  

3. Filing Requirements The CBCA entails additional paperwork by requiring a corporation to file annual returns.[13] Current annual federal filing fees are $12 (online) or $40 (paper filing).[14] The filing requirements must be completed annually, whether or not there have been director or address changes for the corporation. 
The ABCA also has annual return requirements.[15] These requirements also apply to registered extra-provincial corporations.16 A federal corporation registered in Alberta will have to file annual returns under the ABCA to comply with the statute. A corporation operating in Alberta has more onerous filing requirements if it incorporated federally as opposed to provincially. 

4. Name Protection
Federal incorporation allows a business to use its corporate name across Canada.[16] This degree of name protection can only be defeated by a trademark. Federal name searches are therefore more rigorous than provincial name searches. 
Provincial incorporation only allows a business to use its corporate name in Alberta, and a corporation will need to conduct a name search in each additional province in which it wishes to carry on business. There is a risk that its corporate name will be rejected in another province, requiring the use of an alternative name. 

5. Privacy
Corporations Canada maintains a register of the Registered Office Address, Directors, Annual Filings, and Corporate History of federal corporations, publicly available online at no cost.[17]  Provincial corporations have relative privacy with respect to the accessibility of their corporate data, as such information from provincial corporations is not publicly available online, and a fee is required for a search.  


[1] ABCA, ss 6-7, 20, 106.

[2] Service Alberta, “Incorporate an Alberta Corporation” (2023), online: Government of Alberta <https://www.alberta.ca/incorporate-alberta-corporation.aspx>.

[3] CBCA, ss 7, 19, 106.

[4] Open Alberta, “Registry agent product catalogue” (2023), online: Government of Alberta <https://open.alberta.ca/publications/6041328>.

[5] Corporations Canada, “Services, fees and turnaround times – Canada Business Corporations Act” (2020), online: Government of Canada <https://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06650.html>.

[6] Corporations Canada, “Steps to Incorporating” (2020), online: Government of Canada <https://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06642.html#toc-06>.

[7] Service Alberta, “Registry agent product catalogue” (2020), online: Government of Alberta <https://open.alberta.ca/publications/6041328>.

[8] ABCA, s 20.

[9] ABCA, s 20(4).

[10] ABCA, s 20(6).

[11] ABCA, s 131.

[12] CBCA, ss 19(1), 132.

[13] CBCA, s 263.

[14] Corporations Canada, “Services, fees and processing times – Canada Business Corporations Act” (2020), online: Government of Canada < https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06650.html >.

[15] ABCA, s 268. 16 ABCA, s 292.

[16] Corporations Canada, “Is incorporation right for you?” (2020), online: Government of Canada <https://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06641.html>.

[17] Corporations Canada, “Search for a Federal Corporation” (2020), online: Government of Canada <https://www.ic.gc.ca/app/scr/cc/CorporationsCanada/fdrlCrpSrch.html>.
​

Written by Alec Fader
JD Candidate 2025 l UCalgary Law​

DISCLAIMER: This analysis focusses on statutes in Alberta. There are nuances in various partnership and corporations acts across provinces and federal jurisdictions and, although the principles are generally similar, corporate structures being created in other jurisdictions should be researched separately.
 
There are, generally, three types of business associations in Canada which concern start-ups: (i) sole proprietorships, (ii) partnerships, and (iii) corporations. Each of different type of business association has a variety of pros and cons, and there are important considerations regarding how an entrepreneur should structure their start-up. This article seeks to provide a brief outline of what each of these business associations is, and their advantages and disadvantages.
 
Factors Which May Influence the Type of Business Association
 
There are several factors which may influence a business’ decision to choose a certain structure. Two of the most salient are:

1. Limitation of liability[1] – there are only a couple of business associations which are going to limit the liability of individuals who are participating in the business. If a business intends on commercializing and providing products or services, it may wish to consider a structure which limits personal liability.

 

1. Access to capital[2] – some business organizations have an easier time attractive outside capital. If a business intends on raising money from outside sources and scaling, it may want to consider specific business associations.

 
Sole Proprietorships
A sole proprietorship is a business that is created, run, and controlled by one person. There are no formal requirements for the creation of a sole proprietorship – once an individual engages in business, they have created a sole proprietorship.[3]
 
Advantages

1. A sole proprietorship is a simple business organization – there is no need to register or file any formal documents.[4] However, if a sole proprietorship does which to register a trade name, they must make a filing, and the sole proprietorship must be registered with Revenue Canada if making over $30,000 per year. [5]

 

1. A sole proprietorship allows the proprietor to have absolute control over management – as there is only one individual running the business.

 

1. A sole proprietorship provides “flow-through” tax benefits, meaning that the losses of the business can be “flowed through” into personal income tax. This provides an offset of the losses of the business to the personal income tax (for example, if the proprietor made $100,000 of personal income and the proprietorship lost $30,000, the personal income would effectively be $70,000). However, the same is true of gains – the gains of the sole proprietorship will be reported as personal income.[6]

 

1. It is simple to dissolve – the proprietorship can either be sold or the proprietor can choose to wind down the business.

 
Disadvantages

1. Proprietor has unlimited personal liability for the obligations of the business. As a result, any liability which the business incurs (debts, lawsuit settlements, etc.) will render the proprietor as personally liable.[7]

 

1. Limited avenues to finance the business. There is only one way to finance the business, which is through debt. As noted above, the proprietor will be personally liable for the debt, and therefore financing the business can be a very risky endeavour.[8] Therefore, sole proprietorships are generally confined to smaller operations.[9]

 
Partnerships
There are multiple types of partnerships, including:

1. Partnerships
2. Limited Partnerships (“LP”)
3. Limited Liability Partnerships (“LLP”)

 
For the purposes of this article, I will focus on partnerships, as LLPs are available only for certain types of professions (such as lawyers, doctors, and accountants),[10] and LPs are a more complicated structure generally used for joint venture projects and for specific tax reasons, and there is generally not much utility for start-up companies (as the trade-off to obtain limited liability in the LP is to have no role in the management of the LP).[11]  
 
Partnership
A partnership is a type of business organization where two or more people carry on business together with the intention of making a profit.[12] This happens by operation of law and is a question of fact. There are no filings necessary to create a partnership – if the necessary elements of a partnership are there, a partnership has been created.
 
Advantages

1. Flow through tax benefits (described above). In the case of a partnership, each partner will have the ability to use a certain share of the partnership losses to offset their personal income. If the partnership makes a profit, partners will report a share of those profits on their personal income.   

 

1. Again, a simpler type of arrangement – there are no formal requirements that exist, and the partnership, in the absence of a partnership agreement, will automatically be governed by the Partnership Act. However, to provide greater structure and maximize certainty about the operations of the partnership, it is beneficial to draft a partnership agreement (which could be considered a disadvantage as it adds complexity to the arrangement and there are some elements of a partnership which cannot be changed through a partnership agreement[13]).

 
Disadvantages

1. Unlimited joint and several liability on all the partners for the debts and liabilities of the partnership.[14] In other words, if one partner, in the course of partnership business, takes on debt without the consent of the partners (as partners are all agents of one another and can bind one another) each partner will be jointly (together) and severally (individually) liable for the full extent of the debt or liability.

 

1. Again, financing is difficult to obtain.[15] Giving money to a partnership may present an image than an investor is a partner to the partnership – something which both parties are unlikely to want. Furthermore, it is similar to the sole proprietorship where equity cannot be issued. Therefore, the only financing which is available will be debt financing – again, where each partner will be jointly and severally liable for the debt obligation.

 
Corporations
A corporation is a distinct legal entity which has several of the same rights as a natural person. As a quick run-down, the corporation has shareholders, directors, officers. The shareholders of the corporation are commonly referred to as the “owners” of the corporation – they hold equity in the corporation and are entitled to the residuary (what is left over after all other outstanding obligations are paid out in the event of liquidation of the corporation). Shareholders become shareholders by providing capital to the corporation in exchange for equity. Directors are the individuals who run the corporation. The directors, under corporations’ law, have all power to manage and direct the corporation, however, this power must be exercised in a “quorum” as a board.[16] Therefore, it would be inefficient to manage the day-to-day operations as a board, and day-to-day management powers are delegated to the officers, who are the C-Suite of the corporation (CEO, CFO, etc.).[17] It is important to note that there are some functions which cannot be delegated to management,[18] and some functions of the corporation which must be approved by shareholders.[19]
 
Advantages

1. The corporation creates limited liability[20] - As stated, the corporation is a separate legal entity. As a result, it can sue and be sued. Therefore, shareholders and directors will have limited liability.

 

1. Ease of financing[21] - As noted, the corporation can issue equity in exchange for capital. Effectively, a shareholder can give capital to the corporation in exchange for equity, and they become an equity holder of the corporation. This equity can grow and become more expensive, providing incentives for investors to choose this type of investment. For example, an investor can purchase 10 shares for $0.50, and in 2 years those shares may be worth $1.00, representing a 100% increase.

 

1. There are significant tax advantages to incorporation.[22] 

 
Disadvantages

1. Most complicated structure[23] – there are several formal requirements of the corporation. Incorporation occurs, which necessitates constating documents (Articles of Incorporation, Bylaws, etc.). These constating documents must be done with a view to the future in order to ensure they do not create future issues for the corporation.

[1] Bryce C. Tingle, Start-Up and Growth Companies in Canada: A guide to Legal and Business Practice, 3rd ed (Toronto, Canada: LexisNexis Canada Inc, 2018) [Tingle, Growth Companies], at 37.

[2] Ibid, at 28.

[3] Government of Canada: https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/setting-your-business/sole-proprietorship.html [GoC, Small Businesses].

[4] Ibid; Joshua J. Marych and Mitchell Grimmer, “Three Basic Business Structure: Corporations, Sole Proprietorships, and Partnerships” (2024), online at https://www.parlee.com/news/three-basic-business-structures-corporations-sole-proprietorships-and-partnerships/#:~:text=The%20benefits%20of%20incorporation%20include,the%20most%20common%20in%20Alberta. [Marych and Grimmer, Business Structures].

[5] Government of Canada: https://www.canada.ca/en/services/business/start/register-with-gov/register-sole-prop-partner.html.

[6] GoC, Small Businesses, supra note 3.  

[7] Ibid.

[8] Tingle, Growth Companies, supra note 1 at 36.

[9] Marych and Grimmer, Business Structures, supra note 4.

[10] Partnership Act, RSA 2000 c P-3 [Partnership Act], s.81.  

[11] Partnership Act, s. 56; Marych and Grimmer, Business Structures, supra note 4; Tingle, Growth Companies, supra note 1 at 37.

[12] Partnership Act, s.1(g).

[13] See generally the Partnership Act.

[14] Partnership Act, s. 15. 

[15] Tingle, Growth Companies, supra note 1 at 36.

[16] Business Corporations Act, RSA 2000, c B-9 [ABCA], s.114.  

[17] Ibid, s. 115(1)

[18] Ibid, s.115(3).

[19] See ABCA generally.

[20] Marych and Grimmer, Business Structures, supra note 4.

[21] Tingle, Growth Companies, supra note 1 at 36.

[22] Marych and Grimmer, Business Structures, supra note 4.; Invest Alberta: https://investalberta.ca/why-alberta/tax-advantages/. 

[23] BDC: https://www.bdc.ca/en/articles-tools/start-buy-business/start-business/advantages-different-business-structures#:~:text=Corporations%20are%20more%20complicated%20legal%20structures%20compared%20to%20sole%20proprietorships%20or%20partnerships.