Introduction
This FAQ addresses various aspects related to the incorporation and registration of businesses in Quebec. First, we will define incorporation as a legal process that allows a company to become a separate legal entity, thus offering its own rights and obligations. We will then look at the steps needed to incorporate and register a business.
We will also discuss the costs associated with incorporation and registration, specifying the costs related to the various administrative procedures. In addition, we will shed light on the fundamental differences between incorporating and registering a sole proprietorship.
Finally, we will explore the benefits of incorporation, including legal protection and tax benefits, providing a clear overview for those considering starting a business in Quebec.
What is incorporation?
Incorporation is the legal process by which a company is created and becomes a separate legal entity from its founders and future members (investors, executives). The company therefore has its own rights, obligations and resources separate from the founders and members. To govern this structure, there are two roles: shareholder and director. Shareholders are those who hold the shares of the corporation that may entitle them to vote at shareholder meetings, to receive a dividend and their share of the proceeds of the sale of the corporation. Directors are elected by shareholders to manage the day-to-day affairs of the corporation and may assume executive positions such as president, vice-president, secretary, treasurer, etc. In practice, a person may be both a shareholder and a director, especially in small and medium-sized private companies.
In Quebec, there are two legal regimes for creating a corporation, a federal one, the Canada Business Corporations Act (CBCA), and a provincial one, the Quebec Business Corporations Act (QBCA). These two laws aim to define the rights, powers and obligations of the various actors and institutions of a business corporation to ensure its proper functioning. In Quebec, it is possible to incorporate at both the federal and provincial levels. The decision to incorporate a provincial or federal corporation depends on the territorial scope of the corporation’s business and other strategic considerations. We invite you to consult our article on choosing the federal or provincial regime for incorporation to learn more about this subject.
What are the steps to incorporate a business?
The first step in incorporating a corporation in Quebec is to choose the name of the corporation. This can be either a numerical designation such as 1234-5678 Québec Inc., or a proper name for the corporation.
The name of the company must meet certain legal requirements. For example, in Quebec, the name must correctly indicate its legal form (with the addition of the acronym at the end inc.), must be in French and meet the other requirements of the Charter of the French Language, must be sufficiently specific, and must not be confusing with any other trademark.[1]
To check whether the name of the corporation complies with the provincial level and is not used by another business in Québec, visit the Registraire des entreprises website free of charge: https://www.registreentreprises.gouv.qc.ca/RQAnonymeGR/GR/GR03/GR03A2_19A_PIU_RechEnt_PC/PageRechSimple.aspx?T1.CodeService=S00436
At the federal level, the Nuans name search service for a fee of $13.80 will be available at: https://www.nuans.com/site/nuans-corporate-name-trademark-reports/en. This service is now automatically included at no additional cost in the federal incorporation process.
Second, to register a business in Quebec, you must first file the articles of incorporation. You have two options for this process.
- The first option is to file the articles of incorporation with the initial declaration. In this case, you will have to submit the initial declaration after the submission of the articles of association, having previously obtained the associated application number.
- The second option allows you to file the articles of incorporation with the notice establishing the address of the registered office and the list of directors. For this method, you have 60 days after the articles of incorporation are submitted to submit the initial declaration.
By following these procedures and deadlines, you will be able to complete the process of registering your business.
What are the steps to register a business?
To set up a sole proprietorship in Quebec, it is sometimes necessary to go through a registration process. If the name of the sole proprietorship is composed of the first and last name of the owner, it is exempt from the registration requirement, unless it is a tanning salon or a tobacco outlet (art. 21 Act on the Legal Publicity of Enterprises).
In the absence of an exemption, a sole proprietorship must be registered within 60 days of commencing business activities or 30 days if it is a tanning salon or a tobacco outlet. To do so, you must go to the Registraire des entreprises website and file a declaration of registration of a physical person operating a sole proprietorship via the online service.
What are the costs associated with registration and incorporation?
The sole proprietorship that wishes to file a registration declaration faces relatively lower costs compared to incorporating a business. The costs associated with registering the registration declaration are $41, plus the annual updating declaration and the payment of the annual registration fee each year starting in the second year, which is also $41 per year.
On the other hand, several costs must be taken into account when incorporating (inc.). For the year 2026 and for incorporation in Quebec (according to the QBCA), the name reservation costs $20, while the certificate of incorporation of the business corporation costs $397 and this automatically and includes the initial declaration free of charge. Once incorporated, each year during the period determined by the Minister of Revenue (i.e., 6 months after the end of the fiscal year if it is linked to your tax return or between May 15 and November 15 of each year in other cases), you must file an annual return and pay the annual registration fee of $106 per year to the Registraire des entreprises du Québec.
In Canada (according to the CBCA), the incorporation fees for 2026 are $200 online, plus the $397 fee for registration in Quebec if you want to do business in Quebec or if you have an establishment there. Starting in the second year of incorporation, you must file an annual return with the Director of Corporations at a fee of $12. If you are registered in Quebec you must also file an annual declaration of updating with the Registraire des entreprises and pay the annual registration fee of $106.
Failure to complete these formalities each year exposes the company, in the case of registration in Quebec, to penalties of 50% of the annual registration fee and an additional penalty of 1% of the annual registration fee for each month of delay up to a maximum of 12 months. Failure to make the declarations of updates for more than two consecutive years may result in the automatic removal of the registration of the company in Quebec. In the case of a provincial corporation, this also leads to its immediate dissolution.
This cancellation (and dissolution, in the case of a Quebec corporation) can be revoked on application with the payment of a fee of $134.
You will therefore see the disadvantage of a federal business corporation that requires a certain duplication of federal and provincial registration fees and formalities. However, the federal business corporation can then carry on business throughout Canada and abroad, provided that it is registered in each province and territory in which it intends to carry on business.
What documents are needed for incorporation?
In addition to the articles of incorporation and the initial declaration or list of directors and the notice of address of the registered office of the corporation that are required to incorporate the corporation, after incorporation, several other documents will be created to organize the corporation: shareholders’ agreements, by-laws, books and registers of the corporation, GST/QST sheets, minutes, share certificates, to give just a few examples.
In addition to these documents, the first resolutions of the directors and shareholders, often made in written form, must be added, which will aim to:
- To make and approve the rules of procedure;
- Issue the first shares;
- Elect directors and appoint officers;
- Create and update the company’s books and records.
Normally, all of these documents are prepared as a result of incorporation and filed in the corporation’s book. These are not just legal formalities; They serve to provide a stable foundation for the company to seek financing and investors, prevent and resolve disputes, and distribute the company’s revenues in full compliance with company laws. Given the complexity of the task, it can be very convenient to be assisted by a business lawyer who can prepare all these documents quickly and efficiently.
What are the differences between incorporation and registration?
The differences between incorporating and registering a sole proprietorship are significant. A sole proprietorship is operated by a single person, who owns the business and assumes all risks and liabilities. This structure offers great simplicity, flexibility and low start-up costs, but exposes the owner to unlimited personal liability. In the event of the bankruptcy of his company, for example, his personal assets can be claimed by creditors.
In contrast, incorporation creates a separate legal entity, allowing shareholders to benefit from limited liability. This means that their personal liability is normally limited to the value of their shares, thus protecting their personal assets. Additionally, incorporated businesses can benefit from lower tax rates and tax deductions, which can be financially beneficial.
A sole proprietorship offers simplified management while incorporation provides legal protection and significant tax benefits.
What are the advantages of incorporation over registration?
Incorporating a business has several advantages over registering a sole proprietorship. First of all, a company incorporated with a legal personality distinct from its shareholders, therefore, they benefit from limited liability; As shareholders of shares, their personal liability is, with some exceptions, limited to the value of their shares. This protection ensures that their personal assets are safe from the company’s debts, except in cases where they have provided personal guarantees.
In addition, incorporated corporations typically enjoy lower tax rates than individuals with higher incomes. They may also be eligible for small business tax deductions, allowing them to keep more of their profits at the end of the tax year. As a result, shareholders can receive dividends that are often taxed at a lower rate than income from a sole proprietorship.
Overall, incorporation provides increased legal protection and tax benefits, allowing shareholders to maximize their financial returns.
Conclusion :
The distinction between incorporation and registration is not always obvious. In order to make the best choice, there are key aspects to check to meet the needs of your small or large business.
For an in-depth understanding and advice tailored to your specific situation, it is highly recommended that you consult one of our business lawyers. They will be able to guide you through the incorporation or registration process and help you make the best choice for your business.
Disclaimer – This article is intended to inform and raise public awareness of legal issues. The legal information in this article is provided for informational purposes only and is likely to vary significantly over time and according to the precise facts of each situation. This article is not a substitute for a lawyer’s legal opinion and does not engage the liability of Boavista Legal Services Inc., its lawyers, articling students, employees, successors and subcontractors.
[1] These requirements are set out in sections 10 to 13 of the Canada Business Corporations Act (CBCA), and sections 16 and 20 of the Quebec Business Corporations Act (QBCA) and any related regulations. In addition, in Quebec, company names must comply with the Charter of the French Language. The name of the business must be in French under sections 63 to 66 of the Charter of the French Language, but may include an additional name in another language under section 68 of the Charter of the French Language.
