Incorporating in Canada: 4 Things You Need to Know
Are you looking to incorporate a Canadian business but aren’t quite sure how to do it?
Incorporating a business comes with a lot of benefits. By incorporating a business, you’re able to protect your assets, gain easier access to capital, enhance the credibility of your business, and gain anonymity as a business owner.Incorporating your business also allows you to transfer it by selling shares. But what does incorporating in Canada look like? What do you need to do?
Check out this post to learn everything you need to know about incorporating your business in Canada.
Choose a Business Name
Once you incorporate, it becomes very difficult to change your business’s name. For this reason, you must choose a name you love from the start. Here are some tips to help you choose a business name:
• Research competitors to ensure you don’t copy anyone else’s name
• Choose a name that’s easy to spell and pronounce
• Make sure the website domain for the name is available
• Don’t pick a name that could limit your business’s growth (For example, if you’re a bike shop, don’t put “bike” in the name if you plan to sell other sporting equipment down the road.)
Before you permanently settle on a name, do some user research to ensure that the name is catchy. You can check out Opstart NUANS Search to find an available company name.
File Incorporation Articles With Your Government
After settling on a name, it’s time to file incorporation articles with your government. To complete this step, you first need to decide on your share class structure and your company’s initial directors.
The initial directors will include members of the board of directors as, the shareholders, and the officers.
Understand Federal vs. Provincial Incorporation
In Canada, you have the option to incorporate federally or provincially. If you choose to incorporate federally, you’ll need to register your company in the province where it’s located.
However, you’ll still have the opportunity to operate your business in all provinces across Canada. The main benefit to federal incorporation is that it gives you increased name protection. This is because the business name will be registered throughout all of Canada, rather than just in one province.
However, federal incorporation takes a bit more work, which is why some people avoid it.
Decide How to Structure Your Corporation
Structuring your corporation means deciding how you’re going to divvy up the shares amongst shareholders. This is referred to as creating share classes.
The most common types of share classes are:
• Non-voting shares
• Voting shares
• Common shares
• Preferred shares
We recommend looking into the pros and cons of each share class before making your final decision.
Incorporating in Canada: Are You Ready to Incorporate?
Now that you’ve read this guide on incorporating in Canada, it’s time to start filing the paperwork. Once your business is incorporated, you’ll have the legal protection you need to get started.
Be sure to check back in with our blog for more tips on starting a business in Canada.