Setting up a Corporation

The first step is deciding where your business is going to operate.  Are you going to be operating provincially, multi-provincially or federally?  One question you should ask yourself when deciding this is how far you want your business to grow? Do you eventually want to have locations in more than one province? If so, you should incorporate Federally because your corporate name protection will only protect you provincially. So, when you decide to open another location in a different province you may not have access to your current corporation name. That being said, if you know where you want your business to expand to you can incorporate in more than one province by filing multiple incorporation documents. Creating a federal corporation is more expensive because both federal and extra-provincial filing fees apply.

All corporations need a unique name. You can either create a name or operate as a numbered company.  A numbered company is just what it sounds like, a sequence of numbers created by the governing province the company operates in. For example, 568329 Alberta Ltd. Creating a numbered company is quick and inexpensive, and if needed it can be changed later. If you create a unique name, you will need to request a NUANS (newly upgraded automated name search) from an authorized NUANS search house to prove your name is unique and not being used by any other corporation.

Next you will need to submit incorporation documents. There are 3 sections that need to be submitted; Articles of Incorporation, Notice of Directors, and Notice of Address.  The Articles of Incorporation documents will show the government how your business is organized, who owns it, and where it is located. Notice of Directors shows who is in charge of your business. The Notice of Address shows where your business is, and how you and your business can be reached.

Completing Articles of Incorporation

  1. Proposed corporate name (leave blank for a numbered company)
  2. Corporations province or territory
  3. Share structure and restrictions on share transfers (see next post)
  4. Corporations number of directors
  5. Any restrictions you might want to set for your business or business activities
  6. Any other provisions

Completing Notice of Directors

Information about directors is corporate information, therefore it is required that it be made public. Be sure all board members meet the following requirements

    • Must be at least 18 years old
    • Not have been declared incapable by a court
    • Be an individual ( cannot be another corporation)
    • Not be in bankrupt status
    • At least 25% of the directors must be Canadian residents

Completing Notice of Address

Your registered office address is where you must keep your corporate records and where documents will be served in the corporation. Choose an address where you are sure you will receive the documents

For provincial registration submit the documents at your local Alberta Registry office. Registry offices sell do it yourself kits to help with the provincial registration process.  For federal registration submit the documents online or by mail

After you have submitted all the documents, get any other municipal, provincial or federal permits and licenses you may need. The following link helps you find the permits and licences you may require for your specific business in Alberta.

https://services.bizpal-perle.ca/?b=48

Once your business is running it is good practice to keep a minutes book. This will track board meetings and resolutions, changes to shareholder agreement and more.

Be sure to keep the government informed on any changes to your business such as a change of address, or change of directors.

I hope this post will help you in setting up your Corporation!

Contact me for your accounting and bookkeeping needs!

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Corporation or Sole Proprietorship?

 

Hi! Thanks for visiting my blog!

If you are thinking about starting a small business, I’m here to help! Apart from the fun stuff like choosing a name, slogan and designing a logo, you should be thinking about how you want to set your business up. You can set your business up as a proprietorship, partnership, or a corporation. A proprietorship is a type of business owned and run by one person and there is no legal separation between the person and the business. A partnership is pretty much the same, except that it is run by two or more people and each person shares ownership and ownership responsibilities equally. A corporation is a separate legal entity, meaning it is separate from the person who created it. There are pros and cons to setting up your business as a proprietorship or a corporation which will be discussed below.

If you set up your business as a sole proprietorship, you are your business and your business is you. Some advantages of setting up your business as a sole proprietorship include;

  • cheap to set up
  • minimal regulations and filing requirements
  • all profits go directly to you

The negatives of operating your business as a proprietorship include;

  • you are personally responsible for debts accumulated by your business and claims can be made against your personal assets
  • income is taxable at your personal rate, possibly pushing you into a higher tax bracket
  • it can be difficult to raise capital on your own

Advantages of setting up your business as a corporation include;

  • limited liability- you are not responsible for the debt obligations of your company
  • your business will have a continuous life- it will continue to exist after you pass away and ownership of the business can be transferred to someone else
  • possible tax advantages- corporations are taxed at a lower tax rate than personal taxes

Disadvantages of setting up your business as a corporations include

  • closely regulated
  • costly to set up
  • corporate records need to be filed with the government annually

I hope this little blog post helped! My next post will detail the steps required to set up a proprietorship and a corporation so be sure to stop by again soon!

If you have any questions about starting a small business, or any accounting questions please feel free to contact me at gla.greenleaf@gmail.com or stop by my website greenleafaccounting.ca

Cheers!

Growing a small business

Great advice to growing a small business!
1. Word of mouth marketing can go a long way and it is very cost efficient.
2. If you fail, learn from it, refine your approach, and try again!
3. Always be learning and trying new ways of accomplishing tasks.
4. Always be looking to connect and network with other small business professionals.

http://www.cnbc.com/2017/05/03/these-4-tips-will-help-any-small-business-owner-succeed.html