There are many benefits to incorporating your business:

• Tax Planning: You have more control over the income that comes into the business and where it goes. In coordination with an accountant, you can take advantage of tax positioning strategies as well as government grants and tax cuts for small businesses.
• Liability protection: If you are doing business through a corporation, the corporation will usually be the party that is sued in the event of a dispute, keeping your personal assets safe.
• Financing/Investing: It can be much easier to obtain financing or attract investors to your business if you are incorporated.
• Name protection: A corporation has name protection, meaning that the BC Registry will not allow any new companies to have a similar or identical name to your company.
• Continuance: A corporation is a separate legal entity. If you pass away as a sole proprietor, your business disappears – this is not the case with a corporation which will continue to exist.
• Some industries, particularly those with regulator oversight (some trades or medical professions, for example) require you to operate through a corporation.

As a rule of thumb, it may be time to consider incorporating if your company is:

• Making more money than you need to meet your family’s needs;
• Working in a high risk, high liability industry; or
• Hiring employees.

While it is true that anyone can file an incorporation application with the BC Registry, most people are unaware of the legal implications of doing so. The BC Business Corporations Act is the statute containing all the rules that BC corporations must follow. Most people are unaware of requirements such as keeping a corporate minute book or filing annual reports, and will start to run into trouble with audits, banks, or investors when required paperwork is missing. A lawyer can set this up for you properly from the start, allowing you to focus on growing your business.

Not keeping a properly maintained record book can, in rare cases, result in fines, or even in the dissolution of your company.

First you will need to decide who the shareholders, directors, and officers in your corporation will be. You will need contact information and identification for all of them.

You will need to select a name and have it submitted to the BC Registry for approval. Once approved, we can draft the incorporation and minute book documents quickly. If you choose to use a random number for your company you can skip the name approval process, but whether this is a good idea depends on the unique needs of your business.

Once everything is signed up, you will be able to proceed with opening bank accounts and setting yourself up with the CRA, often with the assistance of your accountant.

The name approval process can sometimes take over a month unless a rush fee is paid to the BC Registry in which case it only takes a few days. Mostly due to this name approval piece, the entire process can take anywhere from a few days to over a month.

If you are in a multiple shareholder company, it may make sense to have a shareholder’s agreement. This agreement clearly lays out the rights and responsibilities of any shareholder of the company, such as the rights of each class of shares and how a shareholder would be able to sell or dispose of their shares. It may also contain clauses relating to non-disclosure or non-competition to prevent shareholders from competing directly with the company for a time after they dispose of their shares. The complexity of each shareholder’s agreement depends on the size of the company, how many shareholders are involved, and what the relationship between them is.

Employment agreements can provide clarity on compensation and benefits as well as the rights and obligations of both the employee and the employer, particularly around such critical things as terminating that employee, if it becomes necessary. Severance liabilities can be substantial if an employment agreement is missing or drafted improperly or not in accordance with employment standards legislation, and this can be a massive burden for smaller businesses.

Unlike residential tenancy situations, there are not a lot of statutory rules that apply to commercial tenants. Courts consider commercial landlords and tenants to be sophisticated parties and the contracts between them (leases) will usually govern the relationship. Vague or ambiguously drafted leases can cause massive headaches for landlords and tenants who get into disputes. This is why it is so important to have a lawyer draft or review your commercial lease to ensure that it reflects the arrangement between the landlord and tenant, and that both parties are clear on their responsibilities and obligations.