Gurmeet S Arora

 

                      Certified Genral Accountant

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Frequently Asked Questions: Incorporating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What is a corporation?

 

A corporation is a legal entity that exists separately from its owners.  Creation of a corporation occurs when properly completed articles of incorporation are filed with Federal or the correct provincial authority, and all fees are paid.

 

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What is the difference between a Federal and Provincial corporation?

 

A Federal corporation is incorporated under federal jurisdiction and generally suitable if you intend to conduct your business in more than one province.  You will also be required to register your corporation in the province you set up your business.  Federal corporation require more compliance than a provincial corporation.

Provincial corporations are incorporated under law of province where it is registered.  No further registration is required in that province.

 

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Do I need an attorney to incorporate?

 

No! Having an attorney is not a legal requirement to incorporate. Our office can assist you in incorporating both Federal as well Provincial corporations.  

In spite of their seemingly high hourly fees, a good accountant can be a valuable resource to your small business. If you are unsure of what steps your business should take and you don't have the time to research the mater yourself, even the cost of one hour's consultation can pay off handsomely later. Just remember to bring lots of questions.

Once you have decided, we can form your corporation and save you money.

 

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How do I know if my name is available?

 

We will request your three top name choices. We will check these as part of your order. If neither of these is available, we will contact you for other name choices.

 

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How do I name my corporation?

 

First, we recommend that you spend some time coming up with a name for your corporation. The most common rule is that it must not be deceptively similar to another already formed company. The corporate name must include a suffix. Some examples are "Incorporated", "Inc.", "Limited", and "Ltd."

 

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What are the benefits of incorporating?

 

The primary advantage of incorporating is to limit your liability to the assets of the corporation only. Usually, shareholders are not liable for the debts or obligations of the corporation. So if your corporation defaults on a loan, unless you haven't personally signed for it, your personal assets won't be in jeopardy. This is not the case with a sole proprietorship or partnership. Corporations also offer many tax advantages that are not available to sole proprietors.

Some other advantages include:

  • A corporation's life is unlimited and is not dependent upon its members. If an owner dies or wishes to sell their interest, the corporation will continue to exist and do business.
  • Ownership of a corporation is easily transferable.
  • Capital can be raised more easily through the sale of stock.

 

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How many Directors/Shareholders do I need?

 

Minimum one person is required to act as shareholder, director, and all officer roles.

How many shares of stock should I choose, and at what par value?

We generally recommend 100 shares; although you can choose any amount you want. Your par value is not fixed, and is usually expressed as "No Par Value" or some dollar amount per share such as "$1.00" or "$0.10."

 

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What is a Business  Number or BN?

 

Your corporation is required to have a Business Number.  It is similar to individual SIN and is used for almost anything business does including import, export, filing government deduction slips etc.  It is also used by CRA track payroll, HST and income taxes paid by the corporation.

Business Number is automatically assigned within five business days of business registration or incorporation.  You will need BN to register for payroll, HST, import, export etc.

 

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What do I need to do AFTER I incorporate?

 

You must have your initial shareholder(s) meeting to elect your director(s), if your director(s) haven't been designated in the articles. Then, you must have your initial organizational meeting of your directors.

At this meeting, you will need to elect your officers, adopt your company's bylaws, and issue your stock (among other actions).

 

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How do I get started?

 

Once you have decided on a name call our office to register your corporation. Once we receive your payment and instructions, we verify the availability of your name choices, draft your articles, file them with the Federal or Provincial authority as the case may be and send you all appropriate documents after they have been filed.

 

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