Small business owners often wonder, “Do I need a lawyer to incorporate in Ontario?”
As a business owner, getting incorporation documents and filing for your business online might seem like a way to save money and avoid being taxed, but there are better ways. Many websites might complete half of your process, and when you need to file taxes, it ends up being more difficult.
As a company, you don’t need to retain lawyers, but it is generally a good idea. If anything was to happen and you needed legal advice, your company must have the proper paperwork filed with the office so that you can avoid any complications.
If you are looking to incorporate a company, there are many benefits to hiring a lawyer beyond making your life easier.
Companies should consider the benefits of introducing a lawyer to their team, primarily as a legal coordinator, whether the business is a sole proprietorship or not. You can use a legal coordinator to add structure and organization when implementing new business procedures and reviewing existing ones.
Steps of Incorporating a Business in Ontario
Incorporation is a complex process that we can break down into two steps.
- The first step is to prepare an Articles of Incorporation, file the Articles of Incorporation with the Ontario government, and have them issued.
- Under the second step, an organizational resolution must be prepared that organizes a corporation and issues shares, and shares certificates to the shareholders. If you want to incorporate provincially, you must file an information return within 60 days of incorporation. The Ministry is informed of your organization, and the incorporation is complete at that point.
Many online websites offer incorporation for meagre fees because they only complete the first step of the process. These sites ask you to visit their website and fill out an application. In fact, their services complete the most straightforward part of the incorporating process and charge you to do what you could do on your own by simply filling out the information on the Service Ontario website.
You’ll receive Articles of Incorporation once the process is finished. These indicate that your company was incorporated.
Articles of Incorporation
Articles of incorporation are legal documents established within Canada. They establish a business, including the legal corporate name, and can be submitted to the Provincial, Territorial, or Federal Government. This entity is its legal entity, not connected with the individual.
The government only requires three pieces of information – the name of the corporation, where it is registered, and the names of who runs it. Once the Articles of Incorporation are issued, you must go through the process of forming your company. You’ll need to appoint directors, issue shares, and issue officers.
Organizational resolutions are prepared in the second step of incorporation. The new requirements of the Ontario Business Corporations Act confirm that your company adheres to these central tenets.
The Organizational Resolutions confirm the following:
- Appointment of the directors and officer
- Determine fiscal year-end
- Issue a share certificate to each shareholder, specify the class/percentage of shares, and specify the number of their shareholdings
- Indemnify officers and directors of the corporation
- Confirm the corporation’s bank, accountant, and solicitor
- The company is exempt from preparing audited financial statements.
- Access all of the corporate records and create an official minute book
Why You Should Incorporate Using a Lawyer
It’s always recommended to have your company legally incorporated through a lawyer. This assures you that your business will exist until the government decides they don’t want it to anymore and also ensures there are no loopholes or problems in its incorporation.
If you have a business, using a lawyer can help to make sure it’s appropriately set up for the most efficient income tax planning, including personal tax and income-splitting opportunities. A corporate lawyer understands any legal requirement regarding personal assets, personal liability, and Canada Revenue Agency. It pays to maintain control over your finances, and your lawyer can help.
Using a lawyer, the second crucial step of incorporation is always completed. If you are missing the Organizational Resolutions, there is a danger that your business:
- Is deemed invalid
- Can be removed from the Ontario government business registry and dissolved
- Does not have legal shareholders or a legal director
- Will not capitalize on the benefits of incorporating, such as tax planning and liability limitation
- Can’t be sold
- Will need to be reconstituted at an additional cost
Legal assistance from a lawyer can help you start your new business on the right foot. Lawyers can assist with preparing the following significant parts of incorporation:
- Preparing employment contracts, service contracts, or distribution contracts for your business;
- Branding your business with trade-marks; obtaining the correct licenses and permits required to operate your specific business;
- Helping you take advantage of tax planning and income splitting tax planning tools available to corporations.
It would be best if you took the time to explore all your legal options before launching a business. A lawyer will help you take care of your small business legal services and ensure that everything is in order and that your company complies with regulations. Taking the time to talk with a lawyer can provide you with all the business knowledge and starting resources you will need.
Selection of the appropriate jurisdiction for your corporation is an important one that should be determined with access to legal and accounting advice. There are also numerous legislative requirements and significant consequences if these are missed, which can include dissolution of the corporation by the government with seizure of corporate assets. Corporations are required to complete annual filings and obtain status certificates and a corporation is also required to maintain registries of land ownership and shareholder information, as well as maintain certain information about key shareholders, all of which a corporate lawyer can easily coordinate through and after the incorporation process.
Consider the incorporation process and consult a legal professional for guidance on which business structure is best for your company. Going over your plans to incorporate your business with a lawyer will typically save you time and money in the long run.
Quickly incorporating online could lead to regretting your decision later on. Incorporating your company with a lawyer is more beneficial than using an organization such as Inc. An attorney can evaluate your incorporation documents, sign off on any changes, and ensure they are not challenged later on. It’s easy to create an LLC or Co. with Inc. in just a few minutes – but only by going through the legal hassles that might crop up when doing it yourself.
Having a lawyer specializing in business law set up your company correctly and document your business for the authorities could increase the probability of winning legitimacy. Your business’ legal status and future are at stake. It would be best if you were proactive about finding a lawyer to help protect it now and in the future. Having one who is familiar with your company will also be helpful.
Lawyers are a necessary part of today’s business world. They can assist in preventing legal dramas and leave you with more time to focus on the other aspects of your company. Don’t be scared to hire a lawyer-they’re often one of the best decisions you make for your company.
At RBHF Professional Corporation, we have the legal knowledge and expertise to set you on a path towards success. Feel free to contact us if you have questions about commercial and corporate law.