The standard rule states that a corporation must be incorporated or extra-provincially incorporated in the jurisdiction where it does business. ?Doing business? in itself is not defined, so it is usually given a liberal interpretation as anything that generates revenue. ?Thus, the short answer is that a federal corporation is more suited for online business, because it can do business anywhere in Canada, and your customers can be from anywhere.?A related point: Consider having a click-wrap? agreement. ?For example, when you buy something from iTunes, there is a set of terms that pops up. ?Your action to click on the aAccept? button constitutes the agreement. ?In your click-wrap terms and conditions, take care to clearly state that the transaction is deemed to be under a specific jurisdiction and exclusively governed by the laws of that province. ?You will usually choose your own province because of the home front advantage should there ever be litigation. ?For example, if this was my business, I may want to choose Alberta Law to govern the transaction exclusively. ?Should anyone want to sue me, they will usually have to come here to do it in our courts. ?If they are from far away, it could serve as a disincentive against litigation because of the cost and inconvenience. ?Furthermore, Albertas corporate tax rate is the lowest in the country, and such a term in your click-wrap agreement will go far to prove to CRA that the transaction is done in Alberta.