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Difference between revisions of "Incorporating a Company"
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==Other ways to form a business, apart from a company== | ==Other ways to form a business, apart from a company== | ||
To learn more on whether you want to incorporate a company, check Script [[Starting a Small Business (Script 265)|265]] on “Starting a Small Business”. Other options are a '''sole proprietorship''' and a '''partnership'''. Also, before incorporating, you may want to get advice from a lawyer and an accountant. They can help you decide the best way to set up the company’s authorized share structure (explained later) and structure the company for optimal tax planning. | To learn more on whether you want to incorporate a company, check Script [[Starting a Small Business (Script 265)|265]] on “Starting a Small Business”. Other options are a '''sole proprietorship''' and a '''partnership'''. Also, before incorporating, you may want to get advice from a lawyer and an accountant. They can help you decide the best way to set up the company’s authorized share structure (called the capital structure and explained later) and structure the company for optimal tax planning. | ||
==Two types of companies under BC ''Business Corporations Act''== | ==Two types of companies under BC ''Business Corporations Act''== | ||
Under BC’s ''[http://www.bclaws.ca/civix/document/id/complete/statreg/02057_00 Business Corporations Act]'', there are '''public companies''' and '''private companies'''. | Under BC’s ''[http://www.bclaws.ca/civix/document/id/complete/statreg/02057_00 Business Corporations Act]'', there are '''public companies''' and '''private companies'''. | ||
A public company has its shares listed and traded on a stock exchange. A private company is typically a small company with very few shareholders (sometimes called a closed corporation) and its shares aren’t offered for sale to the public. This script only applies to private companies in BC. | A public company has its shares listed and traded on a stock exchange and must follow securities laws. A private company is typically a small company with very few shareholders (sometimes called a closed corporation) and its shares aren’t offered for sale to the public. This script only applies to private companies in BC. | ||
==All private BC companies are incorporated online== | ==All private BC companies are incorporated online== | ||
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==Decide on a name for your company== | ==Decide on a name for your company== | ||
The name must end in “Limited,” “Ltd.,” “Inc.,” “Incorporated,” “Corp.” or “Corporation,” or the French equivalent to these words. Your new company name needs to be distinctive and have a descriptive element, or you can choose a numbered BC company name. The [http://www.bcregistryservices.gov.bc.ca/ Corporate Registry] has more information on choosing a name. If you decide to carry on business under a trade name, you must display the full legal name of your company on certain documents like contracts and invoices. | The name must end in “Limited,” “Ltd.,” “Inc.,” “Incorporated,” “Corp.” or “Corporation,” or the French equivalent to these words. Your new company name needs to be distinctive and have a descriptive element, or you can choose (or be assigned) a numbered BC company name. The [http://www.bcregistryservices.gov.bc.ca/ Corporate Registry] has more information on choosing a name. If you decide to carry on business under a trade name (called a DBA or a ''doing-business-as name''), you must still display the full legal name of your company on certain documents like contracts and invoices. | ||
==Reserve the company name with the Corporate Registry== | ==Reserve the company name with the Corporate Registry== | ||
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==Decide who will be involved in your company== | ==Decide who will be involved in your company== | ||
The '''shareholders''' own the company and vote to appoint the '''directors'''. The directors control the company and oversee how it is run. They may appoint officers, such as a president | The '''shareholders''' own the company and vote to appoint the '''directors'''. The directors control and govern the company and oversee how it is run. They may appoint officers, such as a president, secretary and senior management. Typically, the '''officers''' handle the daily operations of the company and are overseen by the directors. You can have a one-person company and be the sole shareholder, director, and officer. In BC, unlike in other provinces, there is no requirement to have a BC resident director. [http://www.bclaws.ca/civix/document/id/lc/statreg/02057_06#section124 Section 124] of the ''Business Corporation Act'' has restrictions on who can be a director of a BC company. | ||
==Shareholders== | ==Shareholders== | ||
Consider carefully who the shareholders of your company should be. Even minority shareholders have considerable rights that can | Consider carefully who the shareholders of your company should be. Even minority shareholders have considerable rights that can affect how a company is run. Shareholder disputes can be destructive. Removing an unhappy shareholder from a company can be very expensive, time-consuming, and hard. | ||
== | Sometimes, it is best if investors in a new company are just creditors who lend the company money, and not also owners. Or, you can see how a person works as an independent consultant before hiring them as an employee and lastly | ||
making them a shareholder. You can see how they get along with the existing shareholders and how they will fit in the company in the long term. | |||
There is no requirement for shareholders of BC companies to be BC or Canadian residents. | |||
==Directors== | |||
* A private company must have at least one director. | * A private company must have at least one director. | ||
* A director doesn’t have to live in BC or Canada, but they do have to consent in writing to act as a director. | * A director doesn’t have to live in BC or Canada, but they do have to consent in writing to act as a director. | ||
* A director must provide the Corporate Registry with an address where they can receive documents during standard business hours. If there’s no such office, then the Registry requires the director’s home address. | * A director must provide the Corporate Registry with an address where they can receive documents during standard business hours. If there’s no such office, then the Registry requires the director’s home address. | ||
* A director must be at least 18 years old and cannot have certain criminal convictions, be a bankrupt person (who hasn’t yet been granted formal discharge from bankruptcy) or have been found by a court to be incapable of managing their own affairs. | * A director must be at least 18 years old and cannot have certain criminal convictions, be a bankrupt person (who hasn’t yet been granted formal discharge from bankruptcy) or have been found by a court to be incapable of managing their own affairs. | ||
[http://www.bclaws.ca/civix/document/id/complete/statreg/02057_06#part5 Part 5] of the ''Business Corporations Act'' deals with directors, officers, and shareholders. | |||
==Registered and records office== | ==Registered and records office== | ||
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==Maintaining your company== | ==Maintaining your company== | ||
To keep your company alive, it must file an annual report with the Corporate Registry each year within two months of its anniversary date of incorporation. Failure to file an annual report for | To keep your company alive, it must file an annual report with the Corporate Registry each year within two months of its anniversary date of incorporation. Failure to file an annual report for 2 consecutive years will result in the company being struck off the registry and dissolved. You can restore a company but it’s costly to do so. | ||
If the company changes its registered or records office, or if the directors resign or change their address, the company must e-file other forms with the Corporate Registry. There are fees for most of these filings. As well, each year, every BC company must choose to either appoint an auditor or waive the appointing of an auditor. | |||
==Incorporating a federal company== | ==Incorporating a federal company== | ||
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==More information== | ==More information== | ||
* Check the [http://www.bcregistryservices.gov.bc.ca/bcreg/corppg/index.page Corporate Registry website]. | * Check the [http://www.bcregistryservices.gov.bc.ca/bcreg/corppg/index.page Corporate Registry website]. | ||
* [http://www.smallbusinessbc.ca/ Small Business BC] has | * [http://www.smallbusinessbc.ca/ Small Business BC] has information on incorporating a company and free guides. Call 604.775.5525 in Vancouver or 1.800.667.2272 elsewhere in BC. | ||
* Check your local library, bookstore and Chamber of Commerce for other books and resources on incorporating a company. | * Check your local library, bookstore and Chamber of Commerce for other books and resources on incorporating a company. | ||
[updated | [updated July 2018] | ||
'''The above was last reviewed for accuracy by Oliver Hamilton and edited by John Blois.''' | '''The above was last reviewed for accuracy by Oliver Hamilton and edited by John Blois.''' | ||
