Westcoast Wills & Estates
Westcoast Wills & Estates
The corporate lawyers at Westcoast Wills & Estates can advise on whether incorporating a company makes sense for you. The most common business structures in British Columbia are sole proprietorships, partnerships, and incorporated companies. When it comes to a private company, there are several different forms. What is familiar among all corporations is that a company is its own separate legal entity or legal “person.” This is a fundamental characteristic of a company, since it allows it to hold bank accounts and own real estate, enter into contracts, obtain financing, and hire employees and contractors all in its own corporate name. This also limits an individual business owner’s personal liability, since the owner’s personal obligations remain separate and distinct from the companies’ own obligations. That being said, a business owner could still be held legally accountable for their actions that amount to fraud or negligence. Our corporate lawyers can set up two types of companies: federal and provincial. Most local companies opt for a provincial incorporation.
A federal corporation is governed by the Canada Business Corporations Act and is the preferred form if the business owner intends to operate within more than one province. If they will engage employees throughout Canada or if they expect to operate out of locations outside of just one province, a federal corporation is preferable.
Typically, incorporating a federal corporation is less expensive than incorporating provincially, in terms of the initial registration fee. There is also increased protection of the business’ name nationally. However, a downside to operating through a federal company is the requirement to register in each province in which the business operates. This is called extra-provincial registration and, of course, there is an associated fee.
British Columbia Companies
Companies that are incorporated within B.C. are regulated under the provincial Business Corporations Act. If a business is being run exclusively within the province, then its best to incorporate provincially with the B.C Registrar of Companies.
Advantages of Incorporating
As mentioned above, the main advantage of incorporating is to distinguish and essentially limit the responsibilities of an individual business owner from that of the company. Further, a company may benefit from a lower tax rate, as compared to the rate applied to a sole proprietor or partnership. Financing through a corporation is generally easier to secure. Although, companies are more-closely regulated than sole proprietorship and there are ongoing record-keeping requirements and annual filing obligations. Further, certain information that is maintained by the corporate registry is searchable by the public, such as the names of the company’s directors and their prescribed addresses.
There are several colleges and regulating bodies that oversee specific professions within the province of B.C. It is common for members of these professions to incorporate and operate their business activities through a company. These companies are informally known as professional corporations. Professional corporations are private B.C companies that are governed by the standard provincial legislation, together with the rules and regulations of the profession’s college or governing body.
Only certain professions permit their members to incorporate, inclusive of:
- Massage therapists
- Mortgage Brokers
Each college or governing body provides for their own set of rules and regulations for registrants. As a result, prior to incorporation, the regulator’s approval is required and certain conditions must be met. For instance, the profession’s rules often stipulate what the company must be called, who may own shares in the company, and the type of work the company may take on.
Not every profession in B.C. is permitted to practice through a corporation, such as investment advisors who are not able to operate through professional corporations. However, for those professionals that may incorporate, the primary advantage, rather than a limitation of liability, is being able to access favourable tax treatment as a company. This is because for most professionals, they cannot limit their liability for negligence or malpractice by working through a professional corporation. This restriction is in an effort to protect the public.
How our Corporate Lawyers can help
The business lawyers at Westcoast Wills & Estates can advise on whether incorporating a company makes sense for you. If you would like more information on corporations, societies, partnerships, sole proprietorships, and other business structures, contact us to schedule an initial meeting.