Q: What is a corporation?
Ans: A corporation, also known as a company, is a legally constituted entity, distinct from its owners, who are the shareholders, and the compnay is run by its officers with the aim of generating profits for distribution to its shareholders.
Q: What is a nuans?
Ans: A NUANS is a 5-6 page report that list all corporation, registrations and trade marks similar to your corporation. It is a mandatory filing with any named incorporation in Canada.
Q: Which jurisdiction should I incorporate in?
Ans: You can choose to incorporate federally or provincially.
Q: What are the advantages of incorporation?
Ans: Continuous Existence - A corporation will continue to exist until it is formally liquidated or dissolved.
Limited Liability - The shareholders are protected by limited liability rules. This means that the extent to which the shareholder is responsible for the corporation's debt is restricted to the amount that the shareholder has invested in the company; unless that shareholder has made a personal guarantee against the corporation's loans.
Financing Options - A corporation usually has a wider range of financing options available to it. For example, it can issue different classes of shares and issue bonds. Corporations also tend to be more likely to obtain loans from financial institutions.
Prestige - Corporations tend to be more highly regarded than sole proprietorships and partnerships.
Property Ownership - Corporations can hold the legal title to property.
Ability to Enter into Contracts - Corporations are a separate legal entity and hence can enter into contractual agreements.
Tax Benefits - Corporations benefit from lower rates of income tax and can bring forward losses from previous years to offset the profits from the present year. Please consult with your accountant or tax professional for advice on the best course of action for your situation.
Q: What are the disadvantages of incorporating?
Ans: Initial Costs - There are initial costs of starting up the company. For example, government fees are higher than other forms of business structure.
Corporate Maintenance - Companies must retain and maintain records of its business activities, hold regular meetings, elect directors and keep their shareholders informed.
Accountancy Fees - Financial statements and preparation of corporate tax returns normally require the appointment of an accountant.
Q: What is a named corporation?
Ans: Definition - A named corporation is one that is incorporated under a name, as opposed to a number.
Name Search - In order to incorporate a named corporation, a name search must first be performed to check the availability of that name. For Ontario and federal incorporations, the NUANS name report is valid for 90 days from the date of the report request.
Choosing a Name - If the name you have selected is confusingly similar to another company's name or contains words that are not permitted, for example obscene words, then it will be rejected.
Required Elements - The name you choose must have a distinctive element and a legal element. It may also contain a descriptive element but this is not compulsory.
Legal Element - For federal incorporations, you can choose from Incorporated, Corporation, Limited, Inc, Corp or Ltd. For Ontario incorporations you can choose from those for federal incorporations as well as Incorporee, Limitee, Ltee.
Q: What is a numbered corporation?
Ans: Definition: A numbered corporation is not incorporated with a name but with a number generated by the government.
Formalities: However, for all legal and government paperwork, the company will be referred to by its number rather than its operating name.
Advantage of a Numbered Corporation - It is usually speedier to process than an incorporation of a named corporation.
Disadvantage of a Numbered Corporation - It does not offer the benefit of a descriptive identity for your business.
Q: Do I need to hire an attorney to incorporate?
Ans: It depends - You do not have to hire an attorney to incorporate a company but it is advisable if you have specific requirements. We recommend that you seek legal advice from a competent attorney on any matters which you may be unsure of.
Q: What documents are required to incorporate?
Ans: Don't worry, we will prepare and file all documents either online or fax/send by mail (if necessary)
Q: What is a corporation?