A Step-By-Step Guide to Incorporating Your Business in Canada

If you’re starting a business, one of the first decisions you will need to make is whether or not to incorporate. There are pros and cons to incorporation, and several ways you can go about it. Getting the process started isn’t hard, but you may want to discuss with a business lawyer before you begin.

What Does it Mean to Incorporate Your Business?

The word ‘incorporate’ comes from the Latin word for “embody,” but in modern use, it means to create a legal corporation – a structure for your business that allows it to exist independently as its own legal entity.

Reasons to Incorporate

There are plenty of good reasons to incorporate a business such as:

  • Potentially limited liability for the shareholders, Directors and Officers
  • Usually taxed at a lower rate
  • Financing, raising capital and lending
  • The corporation also exists until it is wound down.
  • Establishing ownership on Intellectual Property, brands, assets, …

When Should You Incorporate Your Business?

Incorporation should form part of your business planning process.

What the Process Looks Like

There are multiple steps in the incorporation process, and most of them can be quickly and easily accomplished with help from a business lawyer. Here’s what these steps look like.

Name Your Corporation

Before you can incorporate, you need to know what your corporation will be called. There are two options for naming a corporation: a word name or a numbered name. A word name must be completely unique and will need to be approved by Corporations Canada.

Get a Business Number (BN) or a NEQ

Next, you’ll need to obtain a business number from the federal government and, if you’re operating in Quebec, a numéro d’entreprise du Québec (NEQ). These numbers identify your corporation for tax purposes and other interactions with provincial and federal governments.

Register For GST/HST/QST

If you’ll be charging GST/HST/QST for any goods and/or services provided by your corporation, you’ll need to register for a GST/HST/QST account, so you can remit those funds to the federal and provincial government when it’s time.

Establish a Registered Address and Board of Directors

Select a registered address for your corporation’s head office. This is where any legal correspondence will be sent. Subject to a unanimous shareholder agreement, you’ll also need to select members for your Board of Directors, who will exercise all the power necessary to manage or supervise the management of the business and affairs of the corporation. There are several legal requirements for who can be a director of a corporation in Canada (for example, they must be at least 18 years old).

Draw Up Articles of Incorporation

Articles of incorporation set out the legal structure of your corporation, including the name, the head office location, the names and addresses of the directors, its share structure, and any other restrictions or rules you may choose to set up. This might include citizenship requirements for owners or directors, and how shares can be sold or traded.

The Role of a Business Lawyer

It’s wise to consult with a business lawyer before you begin the incorporation process. They can answer any questions you may have, bring up others you may not have thought of, and prepare you to successfully incorporate and get your business up and running.  It is important to get it right, so make sure you have everything you need in place before you create your corporation. Reviewing these steps can help—and so can a member of the Robinson Business Law team. Contact us today to get started.