Small Business Incorporation

Business Incorporation - What You Need To Know

Legal Structure

When you're starting a small business and looking to incorporate, one of the first decisions you'll need to make is whether to incorporate it at the federal or provincial level. To make the right choice, you need to consider the scope of your business - do you plan on operating across Canada, or will the majority of your business be limited to one province? By answering this question, you'll be able to determine which option is the best fit for your business needs.

By incorporating your business, you are essentially creating a separate legal entity known as a corporation. This legal structure provides your business with a distinct identity, separate from its owners, and allows it to enter into contracts, hire employees, and conduct business operations in its own name.

Benefits of Incorporating

One of the biggest advantages of incorporating your business is that it offers limited liability protection to its owners. This means that if your corporation faces a lawsuit or financial trouble, your personal assets will be protected, and you will not be held responsible for any debts or liabilities incurred by the corporation.

In addition, corporations have the ability to raise capital by issuing stocks or other securities, which can help your business to grow and expand. Corporations can also enjoy certain tax advantages and deductions that may not be available to sole proprietors or partnerships.

Another benefit of incorporating your business is that it can help to establish credibility and legitimacy with customers, suppliers, and investors. Corporations are often viewed as more stable and reliable than sole proprietorships or partnerships, which can make it easier to attract new business and investment opportunities

Choosing a Corporate Name

Choosing a corporation name can be difficult since there are specific requirements and many names may already be taken. It's recommended to choose three or four flexible names that meet the requirements and include a distinctive and descriptive portion, as well as a legal element. You can do a NUANS search to check for identical or similar names before choosing a name and completing the incorporation process. Alternatively, you can use an assigned number as a company name, but it may not be as attractive or memorable.

Registering Your New Corporation

Once you have obtained your NUANS report, you are now well-equipped to take the final steps towards incorporating your business. The process involves two crucial steps that you need to follow diligently to ensure a smooth incorporation process. The first step involves preparing the required documents, which include The Memorandum, The Articles of Incorporation, and The Notice of Offices for provincial incorporation. You can obtain these forms from the provincial registry of the province where you wish to incorporate your company. For federal incorporation, you will also need a Notice of Directors, which can be obtained from Corporations Canada's Guide to Federal Incorporation. It is a comprehensive guide that can help you understand the process of incorporating online.

The second step is the most critical, and it involves filing your documents with the appropriate authorities to complete the incorporation process. You can choose to file your documents online through the website of the appropriate provincial corporate registry, or you can opt for the traditional paper filing process. Once the documents are filed, the incorporation process is complete, and you can start operating your business as a legally recognized entity and open your new business bank account.