Incorporating a business is an option for any person running a business, no matter its size or purpose. You can even incorporate non-profit companies and societies for social, recreational or religious purposes.
Incorporating a business is not difficult. Our Edmonton corporate lawyers can walk you through how to incorporate a business in Alberta quickly and efficiently and ensure that you end up with the right corporation for your business model.
Why incorporate your business?
There are several advantages to operating your business through a corporation rather than as a sole proprietorship (if you run the business alone) or a partnership (if you have at least one partner). Advantages include:
- – Limited liability. If the company goes bankrupt or gets sued, the shareholders are not responsible for any debts of the corporation beyond what the corporation can pay with its own assets and income.
- – Lower tax rates. Corporations enjoy lower tax rates than personal income tax rates, which can provide tax savings and deferral mechanisms for a business owner.
- – Corporations can sell shares to investors to raise money.
- – The existence of the corporation is not tied to the life of the owner.
In addition, a corporation is legally a person and can do all the things you can do as an individual, including owning property and entering contracts.
Should you incorporate provincially or federally?
You can incorporate your business federally or provincially. Neither option is necessarily better than the other. The better option for you will likely depend on the nature and size of your business.
Federally incorporated businesses can be based in any province and can operate in any province or territory under the same business name. This can be advantageous if your business requires you to move periodically.
Out-of-province corporations can still carry on business in another province or territory. They need to register in the province they intend to do business in and the government of that province will charge a fee for registration.
Depending on the circumstances, the costs may differ for a federally or provincially incorporated company. Be sure to consider not just the costs of incorporation but any ongoing fees associated with maintaining the corporation.
The steps required to incorporate a business
The first step to incorporating your business is to choose a name. An Alberta corporation must have a distinctive element, a descriptive element and a legal element. For example, Ernie’s Piano Tuning Ltd. contains all three elements: “Ernie’s” is the distinctive element; “Piano Tuning” describes what the business does; and “Ltd.” lets people know that it is a corporation.
Choosing a name that meets all the legal requirements can be the most difficult part of incorporation. As an alternative, you can use a numbered name, where the Corporate Registry simply assigns you a number.
The next step is to gather and submit all the information needed for your articles of incorporation. Then you will need to determine and record your corporation’s address, elect at least one director and appoint an agent for service. There will be a fee associated with your application.
Contact our Edmonton Corporate Lawyers Today For a Consultation
While incorporation is fairly straightforward, there are different ways to go about it, and you want to be sure to choose the method that is best for your business. Contact our Edmonton corporate and commercial lawyer today for more information on how to incorporate a business in Alberta.
*The information in this article is intended as a general overview on the subject of corporate and commercial law and does not constitute legal advice. If you are in need of legal advice, please speak with a lawyer.
