Incorporating a business is an exciting moment. You should, however, be aware of the legalities that come with it. Here are four things anyone incorporating a business needs to know.
What It Means to Incorporate
Legal recognition by your province's government matters. Foremost, it confers upon the business the right to pursue legal actions. If you discovered that a third party was infringing on your company's intellectual property, for example, your incorporated business will have legal standing to sue. For legal purposes, it means your business exists in the eyes of the courts.
Requirements for Incorporation
Every incorporated business is required to have founding documents. These outline basic details, such as what type of business it will be. Unsurprisingly, this is a spot where many people seek out business lawyer services. A lawyer can help you decide what type of business to establish and how to write your founding documents.
The type of business you create will dictate many things that follow. For example, a shareholding company will be subject to a range of specific reporting requirements. This means you would need to collect information about the financial status of the enterprise and make it publicly available. Such measures exist to ensure businesses operate with a level of transparency appropriate for how much public risk they create.
Federal vs. Provincial Issues
In Canada, a business can be incorporated at either the federal or provincial level. Going the federal route has the virtue that it allows you to do business throughout the nation. You'll also be able to use the same name in every region of the country. On the downside, there generally is more paperwork involved, and you'll likely have to submit reports on at least an annual, if not quarterly, basis.
If you incorporate provincially, you can only legally do business in the province of record. You can, however, incorporate in each new province as you expand. Notably, this may create conflicts that a business lawyer will have to sort out if someone else is already using the same name in the new province.
A business is a real entity, and as such, it must have two offices. A registered office is essentially your legal headquarters. You'll also need to maintain a records office so government officials and members of the public can access relevant information. These two sites may be on the same property, but they don't have to be.
For more information, reach out to a business lawyer in your area.