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If you are looking to incorporate a company in Canada, you will come across terms that may be difficult to understand. A term like filing an initial return is something entrepreneurs will find as they research legal requirements to set up a company in Ontario.
What is Initial Return Filing and what does it entail? This article will explore everything you need to know about initial return filing, who needs to submit it, and why it should be submitted.
Under the Corporations Information Act for Ontario Corporations & Canada Business Corporations Act (CBCA) for Federal Corporations , all new Ontario & Federal corporations must file an Initial Return. It is used to inform the government that the information submitted by the new corporation is accurate. Additionally, it gathers additional details of the new corporation such as directors’ information.
Continued and extra-provincial corporations also need to file the Initial Return. However, the information required for the extra-provincial corporation is different.
Initial Returns and Annual Returns are different. Initial Returns are filed 60 days after the incorporation of your corporation. They are filed to notify the government that the information provided during the incorporation process is accurate and up-to-date.
The Initial Return is filed once while an Annual return needs to be filed every year.
Every business corporation in Canada must file an annual return every year. By filing an annual return, corporations may avoid potential administrative dissolution. According to the Corporations Act and the Not-For-Profit Corporations Act, all profit, not-for-profit corporations, professional, and charitable organizations must file annual returns.
Annual return is a legal requirement to maintain an active corporation status. Failure to file an annual return can lead to penalties or even corporation dissolution. By fulfilling this obligation on time, you demonstrate compliance with regulatory standards and uphold the accuracy of your corporate information.
Annual and Initial Returns require the same information to fulfill the filing requirements. However, the initial return is filed once and the annual return is filed annually as long as your company is active.
Regulatory compliance
Under the Corporations Information Act for Ontario Corporations & Canada Business Corporations Act (CBCA) for Federal Corporations, Federal and Ontario corporations must file an initial return 60 days after incorporation.
Transparency and accountability
Filing an Initial Return helps the government maintain transparency and accountability of every newly incorporated corporation. The information gathered through Initial Return filings is made publicly available. Investors, partners, stakeholders, and consumers can research a corporation before partnering with the company.
Maintain accurate records
Filing an Initial Return ensures the government has accurate and up-to-date information about the corporation, its officers, and its registered office address.
Keep current database
By filing an Initial Return, Corporations Canada and provincial authorities will maintain accurate and current databases of corporations registered in Canada.
Though an Initial Return confirms if the information given by the newly incorporated corporation is accurate, you will still need to provide the following information when filing the return. They include:
The legal name of the corporation is indicated on the Certificate of Incorporation, Amalgamation for the Amalgamated corporation, or Continuance for the Continued corporations.
Ontario Corporation Number (OCN). You can find the number in the Certificate of Incorporation or the certificate issued after you formed your corporation.
The Date of Incorporation, Amalgamation, or Continuance.
Registered office address. The address must be located within Ontario.
Email address for the corporation. Use the official email address the Business Registry uses to communicate with your corporation.
Primary Activity Code obtained from the North American Industry Classification System (NAICS). The code is used for administrative purposes.
Ontario Company Key. It is automatically assigned when you incorporate a new corporation. You can find the key in your email sent after incorporation.
Directors’ information such as name, address for service, the date that they became a director, nationality, and email address.
Officers such as the president, CEO, or secretary information. Input their information for each position they hold and also provide their names, addresses for service, the date when they became an officer, and email addresses.
The name and address of the person verifying that the information on the Initial Return filing is true and complete.
All corporations in Ontario must file an Initial Return with the Ontario Business Registry. They can do this online through ServiceOntario or a third-party service provider. After company incorporation, business owners have 60 days to file the Initial Return.
It is important to understand that you should keep the Company Key safe and secure. It is received upon incorporation and will be used to file an Initial Return and other filings.
It is free to file your corporation’s Initial Return. If you choose to file your corporation’s Initial Return through ServiceOntario, you will have to:
This can be confusing if it is your first time doing it. Corporate Service providers can help you file the Initial Return if you are not sure how to do it.
Any corporation that defaults in filing an Initial Return, will incur penalties and fines. A corporation that has unpaid fines or penalties is not capable of maintaining a proceeding in a court in Ontario in respect of the business carried on by the corporation except with leave of the court.
Your company’s reputation will be ruined if you fail to file an Initial Return. If investors, partners, consumers, or suppliers who want to do business with you find out your company has not complied with CIA requirements they may not partner with you.
This will affect the reputation of your business since no one will want to associate with it. Additionally, if your business is dragged to court, its reputation will be ruined.
In conclusion, Initial Return must be filed by newly incorporated Federal & Ontario corporations. Corporations must file it within 60 days of incorporation. Failure to file an Initial Return, your corporation will incur penalties and fines and can also result in dissolution.
Filing the Initial Return can be complex especially if you are a new entrepreneur. Icon Offices helps entrepreneurs file Initial Returns once their company is incorporated. We ensure that your corporation is in good standing by ensuring all reports are filed on time.
For more information on filing an Initial Return contact us at [email protected].
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