Incorporate a non-profit organization

Starting a not for profit in Canada: the main steps

Starting a not for profit usually begins long before the paperwork: a group of people shares a purpose (a sports league, a community food program, a professional association, an arts collective) and wants a structure that outlives any one volunteer. Incorporating gives the group a separate legal personality: the organization signs leases, opens a bank account, hires staff and applies for grants in its own name, and the members and directors are generally not personally liable for its debts.

1. 1Define the purposeWrite down what the organization will do and for whom. The purpose clause goes into the articles and shapes everything else, including any later charity application.
2. 2Choose federal or provincialA federal corporation can operate under its name across Canada; a provincial one is often simpler for a local group. The next section compares both.
3. 3Pick a nameThe name must be distinctive and must not suggest a link with a government. A name search confirms that it is available.
4. 4Prepare the articles and bylawsThe articles set the purpose, the classes of members and the number of directors; the bylaws set how the organization runs day to day.
5. 5File with the registryThe articles are filed with the federal or provincial registry, which issues a certificate or equivalent document once they are accepted.
6. 6Organize the corporationThe first directors adopt the bylaws, appoint officers, admit the first members and open the records. Tax registrations follow as needed.

Difference between nonprofit and not-for-profit

In everyday Canadian usage, "nonprofit", "non-profit" and "not-for-profit" mean the same thing: an organization that does not operate to make money for its owners. The federal statute uses "not-for-profit corporation", Ontario's statute uses the same wording, and several provinces call these entities "societies". The Canada Revenue Agency (CRA) uses "non-profit organization" (NPO) for tax purposes.

The distinction that really matters is a different one: a non-profit corporation is a legal form you create with a corporate registry, while a registered charity is a tax status granted by the CRA. Many organizations are one without the other, and the section on charities below explains why.

Federal or provincial non-profit?

The choice depends on where the organization will be active, who funds it and how its members are spread across the country. Some funders and federations ask for a particular form, so it is worth checking their requirements first. A lawyer can confirm which statute fits your project.

Bylaws and first directors

The bylaws are the organization's internal rulebook. They are adopted by the directors after incorporation and confirmed by the members, and they usually cover the points below. Federal and several provincial statutes provide default rules when the bylaws are silent, but relying on defaults can create surprises at the first contested meeting.

• Membership: who can become a member, the classes of members, voting rights and how membership ends.
• Meetings of members: notice, quorum, voting by proxy or electronically, and the annual meeting.
• Directors: how they are elected, their term, how vacancies are filled and how a director can be removed.
• Officers: the president, treasurer and secretary roles, and who can sign on behalf of the organization.
• Finances: the fiscal year, banking authority, the person who reviews or audits the financial statements, and how surplus is used.
• Dissolution: where the remaining assets go if the organization winds up, usually to another non-profit or charity with a similar purpose.

The first directorsdirectorsPerson elected by shareholders to manage the corporation. Federally, 25% must be Canadian residents.See definition → are named in the incorporation documents. The minimum number of directors, any residency rules and any limit on paid staff sitting on the board depend on the statute and, for some organizations, on the size of their public funding. These rules are being verified for each jurisdiction and are not displayed here yet.

Government fees to incorporate a non-profit (sourced)

The government fee depends on the registry. The amounts below come from each government's fee schedule and are dated on the source; they do not include Incorpo's service fees or any name search.

• Saskatchewan: $50source.
• Manitoba: $120source.
• New Brunswick: $62 to $212 depending on property valuesource.
• Nova Scotia: $43.60 (society)source.
• Prince Edward Island: $180source.
• Newfoundland and Labrador: $63 onlinesource, or $70 papersource.
• Yukon: $50 online (YCOR) or $70 papersource.
• Northwest Territories: $50source.
• Nunavut: $50source.

Alberta also allows a non-profit company under its Companies Act: $79.57 incorporation feesource. Processing times for non-profit filings are being verified and are not shown here.

Non-profit vs registered charity

Incorporating a non-profit does not make it a charity. A registered charity is an organization the CRA has accepted, after a separate application, as operating exclusively for charitable purposes: relieving poverty, advancing education, advancing religion or other purposes that benefit the community. Registration lets the charity issue donation receipts that donors can claim on their tax return, and exempts it from income tax, but it also brings stricter rules on activities, spending and reporting.

Do non-profits pay taxes?

Not for profit tax rules start with the federal Income Tax Act. An organization that is organized and operated exclusively for social welfare, civic improvement, recreation or any other purpose except profit, and that does not make its income available for the personal benefit of members, is generally exempt from income tax. It still has tax obligations, and an organization that strays from those conditions can lose the exemption.

• Information return: a non-profit may have to file an annual information return with the CRA, depending on its income and the value of its assets.
• Property income: some non-profits that are incorporated may pay tax on certain investment income.
• GST/HST: non-profits follow special rules as public service bodies; whether they must register and collect tax depends on their revenues and activities.
• Payroll: an organization with employees withholds and remits source deductions like any other employer.
• Provincial taxes: in Quebec, Revenu Québec applies its own rules, including for the QST.

These rules are general. An accountant who works with non-profits can confirm how they apply to your organization's revenues and activities.

Can a not-for-profit make a profit?

Yes, in the sense of generating a surplus. A non-profit can sell goods and services, charge membership fees and run events that bring in more than they cost. What it cannot do is distribute that surplus to its members or directors as profit: the money stays in the organization and goes back into its purpose, for example to build reserves, hire staff or expand programs. Large or recurring surpluses can draw questions from the CRA about whether the organization still operates exclusively for a non-profit purpose.

A not-for-profit grocery store is a good example. Some community groups run food markets that sell at cost to improve access to fresh food; the sales are real revenue, but the margin funds the mission instead of paying owners. Projects like this sometimes choose a consumer co-operative instead, where members own the store and share in its governance. The right form depends on who should control the organization and where any surplus should go.

Not-for-profit salaries

A non-profit can hire employees and pay them a reasonable salary for the work they do; paying staff is not the same as distributing profit. Salaries are usually set by the board against the organization's budget and comparable positions in the sector.

Paying directors is a different question. Whether a director can be paid, and in what capacity, depends on the governing statute, the bylaws and, for a registered charity, CRA rules that strictly limit payments to directors. Organizations that want a paid executive director on the board often check these rules with a lawyer before drafting the bylaws.

Annual filings

Once incorporated, a non-profit has recurring obligations with the registry, with the CRA and with its own members. Missing registry filings for long enough can lead to the organization being dissolved, which also ends its charitable registration if it has one.

Annual return fees and deadlines for non-profits are being verified for each jurisdiction and are not displayed here yet.

Not for profit accounting in Canada

Accounting standards for not for profit organizations in Canada are set in the CPA Canada Handbook. Most private non-profits use the Accounting Standards for Not-for-Profit Organizations (ASNPO), while government-related organizations may use public sector standards. ASNPO addresses issues specific to the sector, such as restricted contributions, contributed services and how to present funds.

Whether the financial statements must be audited, reviewed or simply compiled depends on the statute and, under some statutes, on the organization's revenues; the members can sometimes waive an audit. Funders often add their own requirements. A CPA familiar with non-profits can tell you which level of assurance applies.

How Incorpo incorporates your non-profit

1. 1Guided questionnaireYou describe the purpose, the members, the first directors and the registered office. We show the statutes available in your jurisdiction and what each requires.
2. 2Articles and bylawsWe prepare the articles and a set of bylaws from your answers. You review and edit them before anything is filed.
3. 3FilingWe file with the federal or provincial registry and pay the government fee for you, shown separately on your quote.
4. 4Organizational documentsYou receive the incorporation document and a digital minute bookminute bookOfficial record holding a corporation’s articles, by-laws, resolutions and registers.See definition → with the first resolutions and the registers of directors and members, ready to sign online.
5. 5Next stepsWe list the registrations that may apply (CRA business number, GST/HST, payroll) and the date of your first annual filing.