Originally Published: September, 2021
Updated: May, 2023
Do I need a lawyer to incorporate my small business in Canada?There is no legal requirement to retain a lawyer to incorporate a company, but a lawyer with your best interest in mind will ensure your business is properly incorporated.
While any person can incorporate a company, it can be beneficial to seek legal advice to ensure the process of incorporating your small business in Canada is carried out correctly and in compliance with laws and regulations.
We have outlined the necessary requirements that it will take to incorporate a business and how a lawyer can assist.
Reserving a Name For Your Company
The first step in incorporating a company is to reserve a name.
When submitting the name approval request, one can submit up to three names for approval.
How a lawyer can help: Before the name approval request is submitted, we will review the list of existing companies to determine if your name choices or similar names have already been taken. If we think that your name choices will not be approved by the Registrar, we will ask you to come up with other names. By doing so, we save you time and money.
Determine the Business Structure
Your business can be set up as a corporation, partnership, or sole proprietorship. Each business structure offers unique advantages, disadvantages, and characteristics. Consult with a lawyer to determine which business structure ties in best with your goals and objectives.
A general overview of the different structures:
- Sole Proprietorship – the business is owned and operated by a single individual.
- Partnership – the business is owned and operated by two or more individuals.
- Corporation – separate legal entity owned by shareholders, the ownership is represented by shares of stock.
It’s important to note that each structure varies when it comes to liability, taxation, control and decision-making, and continuity. Epstein & Associates can help you determine what your best route is.
Incorporating a small business can include personal protection by separating your personal assets from the business’s liabilities. Epstein & Associates can work closely with you to explain legal implications and offer advice on maximum protection afforded by incorporation based on your specific business needs.
Determining Share Structure
At Epstein & Associates, we will assist you in determining which type of share structure is most suitable for your business.
How a lawyer can help: For example, you may issue shares to investors of your company but you may not want those investors to participate in the operations of the company. In this situation, you would create classes of non-voting shares and issue such shares to the investors.
This type of insight can only come when consulting an experienced lawyer.
Another great reason to use a lawyer is that we will create a ‘Records Book’ to retain all the required documentation for the incorporation. This includes the Certificate of Incorporation, Incorporation Application, Incorporation Agreement, Notice of Articles, and Articles of the company.
We will also prepare documents required by the Business Corporations Act to be kept at its records office.
These documents include:
- Central Securities Register
- Register of Directors / Consent to Act as Director for each director
- Share Certificates
- Minutes of shareholders approving the incorporation, waiving the appointment of an auditor, and appointing the first directors of the company
- Minutes of directors appointing officers, approving the location of the Registered and Records offices, approving the issuance of shares, determining the financial year-end, and other matters
Minutes of directors appointing officers, approving the location of the Registered and Records offices, approving the issuance of shares, determining the financial year-end, and other matters
How a lawyer can help: Determining what information you’ll need can be difficult. Working with a lawyer can decrease the headache of figuring out what paperwork is needed to incorporate a business.
Additional Contracts and Agreements
As a business owner, you will encounter different contracts and agreements. A lawyer can review and negotiate these contracts on your behalf to ensure protection of your interests and rights.
Examples of additional contracts and agreements you may come across include:
- Supplier agreements
- Employment contracts
- Client agreements
The main reason to have a lawyer assist you with incorporating your business is that lawyers ensure your company is set up properly. More importantly, that your legal interests are protected now and in the future. Getting a lawyer involved early in the life of your business will also be helpful as your business grows as you will have an advisor who is familiar with your company and your circumstances.
With all the legal matters taken care of that gives you more time to focus on managing your business. So don’t be afraid to speak to a lawyer; it will likely be the best call that you make for your business.
For more information or to learn more about business and corporate law, please contact us today and let’s chat about your business goals.
This blog is made available by the law firm publisher, Epstein & Associates, for educational purposes. It provides general information and a general understanding of the law but does not provide specific legal advice. Any specific questions about your legal concerns please contact us now and speak to an expert today.