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Incorporation Guide Continued:
What If I Already Have A Sole Proprietorship Or A General Partnership Registered?
If you have already registered a sole proprietorship or general partnership, you do not require any further set up. However, a sole proprietorship or general partnership does not provide limited liability and also comes with higher income tax rates than corporations. If you wish to incorporate, the only issue could be whether the name you have been operating under is available to incorporate. A Sole Proprietorship and General Partnership does not have any name protection. Because there is no name protection, you may find that another businesses may be using your business name or something similar. Under these circumstances, you can operate as DBA(Do Business As) until you are required to stop using the name by a corporation that has registered the name you are currently operating under as a DBA.
Should I form a Federal Corporation? What is the difference between a Provincial Corporation and a Federal Corporation?
If your business operates in Ontario, you have two choices when it comes to incorporation. You can register as a provincial corporation, or register as a federal corporation. Corporations Canada only creates federal corporations and requires that the newly formed corporation must have a unique name as the corporation is competing against business and corporate names across Canada. When you form a federal corporation, you must also include the federal corporation’s filing in your home province. This is not a secondary incorporation but simply a branch of the federal corporation. However, if you are going to operate an office in another province, you will be required to form an extra-provincial corporation in that province, under the Federal Corporation. This is another corporation and subject to ALL corporate reporting. The requirement of forming the extra-provincial corporation is that corporate law and corporate taxation falls under the provincial regulations, therefore, compliance and taxation must be adhered to. Although forming a federal corporation appears less costly, it requires more reporting plus annual fees to maintain. Failing to maintain these requirements may lead to termination of the corporate rights without notice. Provincially, this is not the case.
Who are the Owners Of The Corporation?
The corporation is owned by its shareholders. Officers and directors do not have to be shareholders of the corporation, as both are elected positions. In a federal corporation, there must be a minimum of one director and there is no maximum number of directors. However, directors must consist of a minimum 25 percent Canadian Residents. The listing of shareholders is not publicly available and is maintained privately.
What is Initial Notice or FORM 1?
The Initial Notice is mandatory in the province of Ontario. This is a simple document that confirms the election of officers and directors for legal purposes, until this form has been filed, the corporation does not have officers or directors excluding the forming director.
What is Shareholders Agreement
When a corporation has more than one shareholder, you may want to consider completing a shareholder agreement. This agreement documents the “what if’s” regarding the business.
What all comprise of the Corporate Supplies
The Minute Book is required in Ontario when you incorporate a business. It is a legal requirement with the Province. It is a binder that holds all of the corporation’s vital information, including who holds what positions, share certificates, meeting notes, etc.
At WFSI we help entrepreneurs evaluate their business needs. We offer assistance with preparation and filing of the Articles of Incorporation, offering the preliminary search and NUANS Report of your chosen corporate name, including the options to add domain registration, Initial Notice filing(Form 1), tax account set ups(such as payroll and HST). More than anything, we offer support to help you start and grow your business in Canada.
To know more, write to us today at robert@wattersonfinancial.com or give us a call today on 647 403 5381
For more information about our tax services, feel free to reach out to our experts at Watterson Financial Solutions Inc To connect with us, you can either call us at 647-403-5381 or email us at robert@wattersonfinancial.com. We are a team of dedicated accounting and finance professionals, and we cater to the needs of individuals and business owners. We specialize in all areas of tax, accounting, assurance, succession planning, risk management, and business consulting. That way, we can give you full control over your finances. We also provide business advice to companies in different industries so you can become tax-efficient and transition your business into the new economy.
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