Incorporating should not simply revolve around the process of the actual registration of the company. Through our offices your work will be properly prepared and done by a lawyer.
Some of the items that we will properly prepare on your behalf after initial consultation and instruction include the following:
a) obtaining specific advice in terms of corporate structure, name and details of incorporation and Tax Planning;
b) conducting a name search to ensure that your name conforms with all regulations and as well that your name is not currently being or has not previously been used such that you risk law suits involving passing off of someone else’s name, trademark infringements, etc.;
c) preparing the Articles of Incorporation and having same executed;
d) issuing the appropriate share certificates, preparing the Corporate Minute Book and obtaining the corporate seal;
e) finalizing all appropriate Resolutions of the Director and Shareholders and filing all necessary forms with the ministry;
f) preparing the appropriate By-Laws for the Corporate Minute Book;
g) preparing the appropriate Resolutions to open up a bank account through the corporate entity; and
h) updating and finalizing the Corporate Minute Book on a yearly basis in compliance with the ministry guidelines and any potential Revenue Canada audits, etc.
Why Incorporate?
There may be reasons, depending on the different circumstances revolving around your business, not to incorporate but there are some very valid reasons as to why one may wish to incorporate as well and these include the following:
1. Limited Liability
By law a Corporation is deemed to be a separate and distinct entity. If the Corporation, operating as a business, incurs liabilities or law suits, these law suits are not against individual proprietors or shareholders under usual circumstances. The shareholders liability is generally limited to the amount of his or her investment in the company. If your business operation involves risk it is preferable to incorporate the business so as to safeguard your personal assets from corporate creditors or law suits. This is a means of creditor-proofing. There are still many statutory obligation liabilities for major shareholders, directors and officers of the Corporation in terms of provincial and federal sales taxes, payroll remittances, income tax remittances, etc. but incorporation does still provide limited liability and creditor-proof protection in many ways;
2. Various Owners
If there are a number of individuals involved in the company, as investors or owners, it may be easier to have the various owners own shares in a corporate entity as an aside from a Partnership Agreement where a new partner entering continually has to endorse the Partnership Agreement, etc. Further, the owners are again protected by means of creditor-proofing, etc.
3. Estate Planning and Perpetual Existence
In the case of partnerships or sole proprietorships they generally cease to exist upon the death of a partner or the sole proprietor. The Corporation, as long as it is appropriately kept up-to-date with the ministry, continues in existence and upon the death or removal of a shareholder or a director, such shareholder or director can be replaced. This aspect allows for Estate planning and easier transition.
4. Income Taxes
Reducing income taxes is one of the most appealing reasons as to why businesses may wish to incorporate and, although this area can be quite complicated and professional advise is recommended, there are basic tax benefits including a lower tax rate for small business corporations, income splitting and Estate planning, year ends that can be set to fiscal years as opposed to calendar years, choices of receiving income in the form of bonuses, dividends or salaries, etc.