Business Incorporation

Why incorporate in British Columbia? Overall, you will want to incorporate your business for two big reasons: (1) to limit your liability, and (2) to reduce your tax burden. You can read more about those benefits in the Appendix at the end of this article, but there are a few reasons people specifically want their businesses incorporated in B.C. No Canadian residency requirement Most Canadian provinces and the Canadian federal government require a corporation to have at least one director who is a permanent resident or citizen of Canada. However, in B.C., there is no citizenship or residency requirement. Many international entrepreneurs choose to incorporate in B.C. so they do not need to partner with a Canadian director. However, it is mandatory to have an address in British Columbia to serve as the corporation’s head office address, even if that address is just a “virtual” office where mail can be received. Less fees and paperwork than a federal Canadian corporation In each province, including B.C., you can choose to incorporate federally with the Canadian government or with the provincial government. When you incorporate federally, you must file documents and pay fees to both the federal and provincial governments. So incorporating provincially in B.C. will result in less overall fees and paperwork. Keep in mind that incorporating provincially won’t prevent you from operating in other provinces in the future, or even in other countries, you will simply need to register your corporation in those jurisdictions as you expand your operations. Steps to incorporating in B.C. 1. Choosing and reserving a business name Choosing a name for your business can be a little stressful, but ultimately, it’s a fun exercise. There are five typical steps to confirm a name is available and getting it reserved. The steps don’t necessarily need to be completed in the order outlined below, but it is a good idea to go through each step before deciding to incorporate. a) Internet searches A good first step is to simply Google your preferred name to see if anyone is already using it. Your main concern should be to identify anyone using the same name or a similar name in B.C. or other parts of Canada. If there’s an international company using a similar name, you may run into future problems with trademarks, but it likely won’t prevent you from incorporating under that name. b) Domain name search Next, you’ll want to check if a suitable domain is available for your company’s website. This isn’t a legal requirement, but you will almost certainly want to secure a domain to match your corporate name. You can use a domain name registrar like Hover to search and see what's available. Although most .com's are taken, there are still plenty of .ca’s, .io's, .co's and other TLDs available. Another option many new businesses and startups choose is to add “get” “go” or “my” at the front of their business name to get an available domain name (i.e. www.getrhinosandwiches.com). c) Trademark search You should check if anyone has already registered a Trademark for your preferred name. The Canadian Intellectual Property Office (CIPO) makes it easy to check trademarks using their online search. When searching, you will also want to consider alternate spellings. If your name is similar to one that is already registered, you may not be able to use it, especially if using that name is likely to confuse consumers. One final note about trademarks: they are tied to specific goods or services. This means that you may still be able to incorporate under a desired name if your intended use is in a completely different industry. A trademark lawyer can help you navigate the ins and outs of any issues relating to trademarks. d) Legal requirements Your business name should have three components: + + Take for example: Rhino Sandwiches Inc. Rhino is the distinctive element which promotes the corporation’s brand. Sandwiches is the descriptive element, as it describes the nature of the corporation’s business. And Inc. is the legal ending. You can choose to end your corporation in “Inc.”, “Ltd.” or “Corp.”, and there are no legal implications or significant differences between those options - you can choose what sounds best to you. There are many companies that simply have a distinctive element and a legal ending with no descriptive element (i.e. Apple Inc.). Without a descriptive element, there is a higher chance that your name will be rejected for being too similar to existing business names. However, in B.C. you are permitted to list three potential business names in your application, so you can always request a purely distinctive name first and ask for an alternate name if your first choice is rejected. e) Name approval request Now you’re ready to formally request approval of your preferred corporate name. Before actually filing your incorporation documents, you will need to get your proposed business name approved by BC Registry Services. The Name Request form is a simple document where you can list up to three potential names for your corporation. You are allowed to rank your three choices, so you will get your first choice unless an issue is identified by the examiner. Final words of advice, if you’re stuck and having trouble finding a name that works, these business name generators can be useful and fun: https://www.shopify.ca/tools/business-name-generatorhttp://www.namemesh.com/company-name-generatorhttp://www.naminum.com 2. Filing the incorporation application Now we get to the most important part: actually preparing and filing the incorporation documents. In general terms, there are three different ways to incorporate in British Columbia: a) Do it Yourself, b) through a Law Firm, c) online through Ownr. a) Do it yourself (DIY) method First, you can complete the incorporation documents yourself. Not surprisingly, we don’t recommend this approach and suggest you obtain professional advice. But it’s important for us to explain why. The B.C. government charges $351.50 to submit the incorporation application, plus name reservation fees of $31.50. So the obvious advantage of doing it yourself is a temporary lower cost. However, the costs will actually balloon within the first year to fix missing items. We explain more below. No corporate organizational documents. The biggest issue is that by doing it yourself, you only obtain half of what is required to incorporate. The government won’t provide the legally required corporate organizational documents to properly structure your corporation. These are also known as your minute book documents. To complete the incorporation you need the following documents to structure the company: Shareholder Resolutions, Director Resolutions, Shareholder Ledgers, Director and Officer Registers, Director Consents, Share Certificates, Corporate Bylaws and Waiver of Auditor Form. These are significant, legally required items that won’t be provided when using the government website alone. One-size-fits-all approach. The government website has limited flexibility. This means that you won’t be able to set up customized share classes that suit your business. You’ll be stuck with the website’s defaults. Alternate share classes and customized bylaws can be extremely useful for adding non-voting shareholders, paying dividends, or attracting investors. b) Traditional method: law firms Traditionally, many small businesses contact a local law firm to get incorporated. This removes all of the concerns about the DIY method: you will get customized advice that fits your company’s future goals, and your lawyer will prepare all the corporate organizational documents to properly structure your corporation. But there is a downside with the traditional method. The cost is high and the process is likely paper-based and entirely offline. Incorporating through a traditional law firm can range in price from $1,200 — $1,800. Apart from the high cost, you’ll need to take time away from your business to call the law firm, set up an appointment, and either drive to the lawyer’s office to pick up the documents or have them couriered to you (at your cost). c) Incorporating through Ownr At Ownr we've made incorporating easy and affordable. Here’s what makes Ownr different: One affordable price. With Ownr, you can incorporate your company through our intuitive platform. We explain everything in plain language, so you can feel confident navigating throughout. Processes that typically take weeks, involve stacks of paper, and cost thousands of dollars, have been transformed into quick, paperless, and affordable tasks that require no legal expertise. Corporate organizational documents. Company Bylaws, Shareholder and Director resolutions, Share Issuances, and more are all automated through Ownr. This means that you'll get all the documents that you would normally get if you went to a law firm, tailored to your business, and you'll save time and money in the process. Automatic company updates. Anytime your company details change (like when you want to add a new director or change your address), Ownr automatically takes care of the paperwork: automatically filing forms with the government, preparing the required corporate resolutions, gathering eSignatures, and securely storing all documents back into your account. Secure and organized online storage. Once you've incorporated, all your company's legal documents are organized and securely stored in your Ownr account. Is incorporation the right choice? Should I incorporate? Rather than how to incorporate, you might be wondering if incorporation is right for you and your business at this time. So here’s a short refresher on why and when you should incorporate your business. Benefits of incorporation The two main benefits to incorporation are limited liability and tax advantages. Limited liability By incorporating, you will separate your personal and business obligations. Therefore, if your company goes south, your personal assets including your home and your car will remain protected and untouched. This is different than if you remained a sole proprietor or a partner in a partnership, as you would remain personally responsible for the debts of the business. It is important to remember that directors of corporations may remain on the hook for unpaid taxes and unpaid employees’ wages in specific instances. Tax advantages Corporations are taxed differently than individuals. Generally, tax rates for corporations are lower than tax rates for individuals. Also, corporations are subject to flat rates of tax, where individuals are taxed on a progressive basis. Additional benefits of incorporating Raising money It is easier to raise money from investors as incorporated businesses can sell shares in exchange for investment capital. Transferable The ownership of a corporation is easy to transfer. So succession planning is much easier in a corporation than a sole proprietorship. Continuous lifespan Corporations are not limited to the lifespan of the owners. They can exist indefinitely. Drawbacks of incorporation The only real drawbacks to incorporating your business are the added expenses and some additional paperwork. There will be the initial cost to incorporate your company as well as ongoing accounting and filing costs. Also, a corporation requires ongoing filing with the government and record keeping, which is easy to manage through Ownr.

Business Incorporation

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