There are several features that are unique to a corporation which make it the favoured legal structure for many businesses. These include: Limited Liability. A primary advantage to incorporating a business is the limited liability conferred upon its shareholders. The shareholders are not liable, in most cases, for the debts and other obligations of the corporation. A shareholder's liability for the debts of the corporation is limited to the amount of funds such shareholder has invested in the corporation. Creditors only have rights against the corporation itself and not against the shareholders. Perpetual Existence. A corporation has the feature of perpetual existence. It is not dependent upon the life of its shareholders, directors and officers and will not be affected by changes in, deaths or retirements of its members since the corporation is considered a separate &quot;person&quot;. This advantage allows for the orderly transfer of ownership of the corporation (i.e., its shares). Furthermore, due to its independent legal status, it may own property in its own right, enter into contracts and sue (or be sued). Capital Acquisition. A corporation may offer greater potential sources of capital than other business forms (such as sole proprietorships and partnerships). Corporations can issue various classes of shares (in addition to other debt instruments such as bonds) to raise capital, which, typically, is more attractive to investors. There are tax advantages to incorporating your business, such as lower income tax rates and carrying forward losses of previous years to offset profits in subsequent years, among others. Credibility and Prestige. Incorporation may help provide your business with credibility and prestige in its business dealings.
Regulated versus Non-regulated For non-regulated professions (professions that do not have a provincial licensing body) the process, rules and guidelines of how to incorporate are straightforward. Get tax and accounting advice as to what the business implications of whether to incorporate are, make your decision, and then follow the guidelines set out in the Provincial Corporations Act. For regulated professions (professions that have a provincial licensing body) the process is more complex. First you should review the guidelines specified by your provincial governing body as to the process and requirements for incorporation (note that these can vary widely between different professions and provinces so be sure to check these first), then armed with this information get tax and accounting advice as to what the business implications are, couple these 2 separate processes into helping you make your decision, and then follow the guidelines laid out in your provincial governing body together with the guidelines laid out in the Provincial Corporations Act. For more information on “Regulated versus Non-Regulated” click on this link which will open a window to further details. http://www. cicic .ca/ factsheets /factsheet2en. stm #2
Choosing a corporate name is a difficult task since it must conform with a number of statutory requirements. To increase the chances of your proposed name being accepted, it is recommended that you choose a name that both accurately describes your business and is as specific and distinct as possible. If your proposed corporate name uses common, popular names, the chances of it being accepted decrease. Furthermore, you are prohibited from using a corporate name which is either identical or deceptively similar to one that is already used by another corporation in your jurisdiction. In some cases, you may decide to take over an existing sole proprietorship or partnership, which has a name that is either identical or similar to your corporation's proposed name. Under these circumstances, the corporation's Articles of Incorporation may have to be accompanied with additional documents, such as: a consent signed by the sole proprietor or all the partners; an undertaking by the sole proprietor or partnership that dissolution proceedings will begin before the proposed corporation carries on business; and a declaration by the sole proprietor stating that he/she is in fact the sole proprietor or by a partner stating that the consent and undertaking were signed by all the partners.
Although the corporation must be identified by its actual name (i.e., the number followed by Canada Inc. or Ltd.) for all formal and legal matters and relations (e.g., contracts), the corporation may use its trade name for exterior signs, business cards, letterhead, etc.
This is one of the major considerations that people take into account when they decide on a corporate name. Moreover, having a numbered corporation may lessen the prestige and credibility associated with your business. If you decide to incorporate a named corporation using CA4IP.ca, then CA4IP.ca will obtain on your behalf the appropriate &quot;name search&quot; report that must be included with the Articles of Incorporation.
If you intend on carrying on business only in one province, you may choose to incorporate either a provincially chartered corporation under the laws of that province or a federally chartered corporation. If you incorporate a provincially chartered corporation, you should be aware that if you intend to carry on business in that province as well as in other Canadian provinces you must register as an extra-provincial corporation in every province in which you will carry on business. If you incorporate a federally chartered corporation, there is no need to register any extra-provincial filings. Furthermore, there are other issues that you may consider in selecting where you incorporate your business: the government fees of a federal chartered corporation versus a provincially chartered corporation; and determining the advantages and disadvantages of each jurisdiction's corporate laws and tax structure. If you require additional information to make an informed decision as to where to incorporate your business, we suggest you contact competent legal and tax professionals and discuss these matters with them.
Included in your handouts is a chart outlining the current government incorporation fees for each jurisdiction. Furthermore, if you choose to incorporate a named corporation, you will be required to file a &quot;name search&quot; report (executed by CA4IP.ca) with the Articles of Incorporation.
Certain provinces require that a corporation incorporated in their territory have a registered agent. Corporations often use a professional registered agent to maintain crucial documents sent from government departments or other agencies separate from other corporate correspondence. CA4IP.ca can provide registered agent services in all Canadian provinces.
As such, the included handout is provided for your own knowledge to better understand the organization and workings of a corporation.
Transcript of "Agenda Getting Started Pro's "
Agenda <ul><li>Getting Started </li></ul><ul><li>Pro’s & Con’s of Incorporating a Business </li></ul><ul><li>Who May Incorporate </li></ul><ul><li>Number of Directors and Officers </li></ul><ul><li>Selection of a Corporate Name </li></ul><ul><li>Named Corporations </li></ul><ul><li>Numbered Corporations </li></ul><ul><li>Named versus Numbered Corporations </li></ul><ul><li>Place of Incorporation </li></ul><ul><li>Required Documents (Filings) to Incorporate Registered Agents </li></ul><ul><li>Organizing the Corporation </li></ul>
Getting Started <ul><li>Before proceeding with the incorporation of your business, we suggest you review the information that answers many frequently asked questions. This information may help you better understand and save time with the incorporation of your business. </li></ul>
Pro’s and Con’s of Incorporating a Business <ul><li>Pros </li></ul><ul><ul><li>Limited Liability. </li></ul></ul><ul><ul><li>Perpetual Existence </li></ul></ul><ul><ul><li>Capital Acquisition </li></ul></ul><ul><ul><li>Tax Advantages. </li></ul></ul><ul><ul><li>Credibility and Prestige </li></ul></ul><ul><li>Cons </li></ul><ul><ul><li>Start-Up Costs. </li></ul></ul><ul><ul><li>Maintaining of Corporate Records. </li></ul></ul><ul><ul><li>Double Taxation. </li></ul></ul>
Who May Incorporate <ul><li>Many independent professionals, in many provinces, as of just recently, may now incorporate. Note the emphasis on many provinces – this is because each province has its own Corporations Act and they can vary widely in the application of their guidelines and regulations. As well many professions have their own provincial licensing body setting out additional rules, regulations, process and forms specifying the procedures for incorporation for a member of that profession in that particular province. Regulated versus Non-regulated </li></ul>
Number of Directors and Officers <ul><li>While most jurisdictions require a corporation to have at least one director, you may elect to have many directors. </li></ul><ul><li>Most jurisdictions require that there be certain officers' positions such as President, Secretary and Treasurer. However, the same person may fill these positions. </li></ul>
Selection of a Corporate Name <ul><li>Every corporation must have an acceptable name at the time of their incorporation because the corporation will then exercise its rights and carry out its obligations under this name. </li></ul>
Named Corporations <ul><li>must conform with a number of statutory requirements. </li></ul><ul><li>choose a name that both accurately describes your business and is as specific and distinct as possible. </li></ul><ul><li>you are prohibited from using a corporate name which is either identical or deceptively similar to one that is already used by another corporation in your jurisdiction </li></ul><ul><li>you may decide to take over an existing sole proprietorship or partnership, which has a name that is either identical or similar to your corporation's proposed name. </li></ul>
Numbered Corporations <ul><li>To speed up the incorporating process and to permit immediate delivery of the Articles of Incorporation, a corporation can, be assigned a number as its corporate name. The corporation may then register a trade name and be known to its customers as doing business under the trade name. </li></ul>
Named vs. Numbered Corporations <ul><li>Even though using a numbered corporation is advantageous since it avoids the delays and expense involved in searching and reserving a corporate name, it is not suited to everyone's needs. </li></ul><ul><li>In particular, a numbered corporation is not informative in that it does not describe the business in any way. </li></ul>
Place of Incorporation <ul><li>Federal vs. Provincial Corporations? </li></ul><ul><li>The question as to whether you should incorporate your business also involves deciding whether your business should be incorporated under the federal laws of Canada (i.e., a federally chartered corporation) or under the laws of one of the provinces of Canada (i.e., a provincially chartered corporation). </li></ul>
Required Documents (Filings) to Incorporate <ul><li>Most jurisdictions require the filing of Articles of Incorporation and the statutory government incorporation fees. The Articles of Incorporation will be prepared by CA4IP.ca following your filling out our order form. The government fees vary depending on the jurisdiction of your corporation. </li></ul>
Registered Agents <ul><li>A registered agent, such as CA4IP.ca, acts as a registered address of the corporation in the province or other jurisdiction of incorporation. The registered agent provides a registered address for the receipt of service of government filings (and in certain cases legal papers) and acts as a local contact for government agencies. The registered agent forwards any such documents and correspondence to the corporation. </li></ul>
Organizing the Corp. <ul><li>All of the required steps to organize your corporation will have been performed by the time you have received your corporation's Articles of Incorporation, its minute book and all other required documentation (corporation's by-laws, organization resolutions etc.) from CA4IP.ca. The remaining task will be for you, and the other directors, and shareholders, if any, to sign the relevant resolutions, share certificates, minutes and other documents. All such documents will clearly indicate where each person must sign. </li></ul>
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