A non-for-profit corporation is a form of legal entity similar to a for-profit company where the incorporated entity is a “legal person” with identity separate from its directors and members. A non-for-profit company generally has some charitable purpose, which sets it aside from for-profit companies, whose sole purpose is to generate a profit.
Non-for-profit companies, like any other form of corporation, can be governed by either federal or provincial legislation and thus are incorporated in accordance with the requirements posed by such legislation.
In order for a non-for-profit corporation to benefit from tax-exempt status and to be able to issue to its donors tax receipts, it must apply for a “charitable status”.
In this post, we will cover the steps that need to be taken in order to incorporate a non-for-profit company.
STEPS TO INCORPORATE A NON-FOR-PROFIT ORGANIZATION
STEP 1 – Decide in which jurisdiction to incorporate
As noted above, non-for-profit companies may be governed by either federal or provincial law. The choice of jurisdiction would be affected by several factors. One factor to consider is the location of the organization. Will your organization be locally based and carry on its activities in one jurisdiction? Or will its activities span simultaneously across several provinces? Or perhaps the nature of the organization’s activities will require it to move its office freely from one province to another? What is the incorporation budget of the new organization-to-be? Fees vary from as low as $35 to as high as $200. Keep in mind, that if incorporated federally, provincial registrations may be required. **
STEP 2 – Reserve a corporate name
All non-for-profit corporations must have a legal name. Corporate name must be unique and not used by any other corporation. It must have a legal ending, which, depending on the jurisdiction, can be “Inc.”, “Incorporated”, ”Incorporée”, “Corp.” or “Corporation”. The first step to take while choosing a name is to do a preliminary name search for the name you have in mind to check if this name is available. The next step is to reserve your proposed name by ordering a NUANS name search in the chosen jurisdiction. This will have your name officially reserved solely for your new organization for 90 days.
Contact ESC Corporate Services Ltd. to have your proposed name reserved for you in minutes.
STEP 3 – File Articles of Incorporation and/or Register Extra-Provincially
Prepare and file with the appropriate government your new organization’s Articles of Incorporation. Government agencies often have standard Article templates that you can easily apply to your own organization.
Keep in mind that if your organization intends to apply for a charitable status, the Articles need to contain special clauses which will ensure that your organization qualifies. Inquire with your government agency for special clauses to ensure that your new organization benefits from charitable status.
If the organization was incorporated federally, you might be required to register it extra-provincially in the province where it intends to carry its activities. Below is the list of fees, per province, to carry out extra-provincial registration for a non-for-profit corporation.
Below is the table of fees for incorporation and/or EP registration per province, together with standard and expedited delivery times. Keep in mind, that expedited delivery may incur additional fees.
|Alberta||$175.00||$175.00||10 days||5 days|
|Brutish Columbia||$100.00||$100.00||40 days||20 days|
|Manitoba||$70.00||$70.00||30 days||15 days|
|New Brunswick||$60.00||n/a||30 days||15 days|
|North West Terr.||n/a||$300.00||n/a||n/a|
|Nova Scotia||$35.00||n/a||30 days||n/a|
|Ontario||$155.00||$100.00||60 days||15 days|
|Prince Edward Isl.||n/a||n/a||n/a||n/a|
|Quebec||$145.00||$32.00||26 days||12 days|
|Saskatchewan||$60.00||$110.00||30 days||15 days|
Contact ESC Corporate Services Ltd. to have your Articles filed.
STEP 4 – Apply for Charitable Status
Charitable status is issued by Canada Customs and Revenue Agency (“CCRA”).
There are benefits associated with obtaining a charitable status, one of which is the ability to issue tax receipts to donors which would allow such donors to deduct the donations from their taxable income. This generally viewed at positively by potential donors and thus aids the charitable organization with fund raising activities. Another benefit of obtaining a charitable status is ability to be exempt from certain taxes. Refer to this website for information for charitable organizations.
To apply for a charitable status, an application must be filed with CCRA. CCRA forms for all non-for-profit filings are located here.
As part of decision making in granting the charitable status, CCRA looks at a number of factors, such as your organization’s objects and the activities and programs that your organization carries in order to achieve its objects. A charitable organization’s objects need to fall within the meaning of “charity” as they have been recognized by the courts. Unfortunately, not every worthwhile object is considered “charitable”. So, what exactly is “charitable object”?
“Charitable” objects are, generally, objects that benefit the community in the way that courts have generally accepted as being charitable. These objects may include things like advancements in education or religion, the relief of poverty, food banks, charitable care giving facilities, victim relief funds, preservation of environment, protecting the welfare of children, providing counselling services to troubled teenagers, etc.
We recommend that you contact CCRA to get a verbal clearance on your organization’s proposed charitable object(s) before filing the actual application. This will ensure that your application is not rejected due to an insufficient “charitable” status of your object and the overall process of establishing your new non-for-profit organization is not delayed.
The process routinely takes 6 months to 18 months and requires applicants to fulfill a number of requirements. Refer to this website for information for charitable organizations.
STEP 5 – Comply with Administrative Requirements
There are a number of requirements that, as administrators of your non-for-profit organization, you need to comply with. These include various annual filings, as well as any routine filings and record keepings. Over time, the number of documents that you are required to safekeep will grow tremendously. We recommend that you keep your organizational documentation in an organized fashion. Minute books are great for these purposes and can be purchased online at our online store.
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