This article explains the steps you and your founding team need to take after you incorporate your business.
Once your lawyer completes your Incorporation, there will be a few things you need to do as the business owner(s).
- Your Minute Book
- Business Bank Account
- Pay For Shares
- Shareholder Agreement
- Canada Revenue Agency Matters
- Annual Corporate Return
1. Your Minute Book
In Canada, every corporation is legally required to keep a minute book of their corporation. Additionally, any shareholders and creditors of the corporation, their personal representatives and the director(s) may examine the minute book during the usual business hours of the corporation, and may take extracts from the records, free of charge.
Many corporations like to print and keep a physical copy of their minute book, but keeping a digital version is completely acceptable and legal. At a minimum, we suggest downloading your PDF and keeping a copy for off-line viewing.
2. Business Bank Account
The first thing you need to do with your new corporation is to open a business bank account. This is a critical and legally required step. It separates the founders’ finances from the corporation’s, limits your legal liability, and differentiates the founders’ personal taxes from the corporation’s business taxes.
A director of the corporation must open the corporation’s bank account. To open the account and confirm the authority of the director, the bank requires access to the corporation’s minute book, specifically, its Articles of Incorporation and proof that the person opening the account is indeed a director.
3. Pay For Shares
Once your corporation has a bank account, the initial shareholders of the corporation must pay for the shares they subscribed for as part of the incorporation process (this is a legal requirement — the initial subscription). When setting up a new corporation, this is usually a small fee as the shares are nominally priced.
The easiest way to collect payment is by having the shareholders write cheques to the corporation for the value of their respective initial share allocations, or e-transfers which are directly deposited. Paying for shares with cash is highly discouraged as it’s difficult to track.
Refer to your minute book documents, available on the “My Organization” page on your Goodlawyer account once your incorporation is complete to see how much money each shareholder owes the corporation.
NOTE that Goodlawyer does NOT handle this step — it must be facilitated by you and your business partners.
4. Shareholder Agreement
If you founded your new corporation with more than one shareholder, you should strongly consider using a Shareholder Agreement to help govern your newly formed corporation. This document clarifies the relationships between the shareholders and the corporation, and clearly defines their rights and obligations amongst each other and to the corporation.
5. Canada Revenue Agency Matters
Once you are incorporated, it is up to the directors of your new corporation to use the corporation's new business number to apply for income tax and payroll remittance accounts, and harmonized sales tax (HST) or goods and services tax (GST) accounts, all from the Canada Revenue Agency.
Although it is not legally required to register for an HST/GST account, it is strongly recommended that you obtain it before hitting the $30,000 annual gross revenue threshold for having to collect and remit sales taxes. If you do not anticipate hitting this threshold, then an HST/GST number is optional.
6. Annual Corporate Maintenance
Every corporation in Canada is legally required to file an annual corporate return with their corporate regulator(s), starting on the first anniversary date of your Incorporation and every year after (this is NOT the same as your annual corporate tax return which is filed with the CRA).
Goodlawyer will not maintain your corporation. It is your responsibility to keep track of any changes to your corporate information and ensure they are captured and filed accordingly with every jurisdiction that your corporation is registered in each and every year. For simple corporations and filings with minimal changes to your corporation, filing your annual corporate return can easily be done at your local registry, or even through an accountant.
If your annual corporate maintenance requires help from a lawyer, if for instance there are changes to your shareholders, officers, directors and capitalization table, a new registered address or extra-provincial registration, new share classes or certificates, etc. you can hire a good lawyer over the platform and get an upfront price for your service.