You’ll likely be making more and more legal decisions as your business matures. Whether it’s changing your business structure, charging the Goods and Services Tax (GST), filing for intellectual property protection, hiring employees, expanding overseas, importing, or considering a foreign investment, there are laws and regulations you’ll want to be aware of.
Should You Incorporate?
As a new business, a sole proprietorship or partnership may have been the most appropriate form of business structure. As your business grows, however, there might come a time to consider incorporation.
Some of the advantages of incorporating are:
- Name protection in British Columbia
- Limited liability protection
- Transfer of ownership
- Continuous existence
- Separate legal entity
- Ease of raising capital (compared to a sole proprietorship or partnership)
- Possible tax advantages if you qualify for a small business tax rate
However, the disadvantages of incorporating include:
- Cost
- Increased regulations
- Recordkeeping requirements
- Possible double taxation of profits
- Charter restrictions
Provincial and Federal Incorporation
To change your business structure, you need to dissolve your existing proprietorship or partnership and register as a new corporation. To dissolve your existing proprietorship, you would complete and file a dissolution form with the provincial Corporate Registry.
To register as a corporation, there are two options:
- Self-incorporation online at Corporate Online
- Incorporation through a lawyer. If you need a lawyer, you may wish to contact the Lawyer Referral Service.
If you are going to expand your business to other provinces within Canada, you might want to consider federal incorporation, which would provide name protection across Canada. However, you would still have to file and register as an extraprovincial company in each province in which you establish a physical presence. Refer to Corporations Canada regarding the process to incorporate federally, and to Corporate Online for the process to register an extraprovincial company.
Doing Business As: Registering an Operating or Trade Name
As a corporation, you may wish to register an operating or trade name (subsidiary or branch) which is known as a DBA, or “Doing Business As”. DBA’s are registered as proprietorship with one owner being the corporation. Since the DBA falls under the corporate umbrella, it would have the limited liability of the corporation and it would use the same business numbers, but it would not have name protection.
Filing and Reporting
As your business grows, keeping an orderly record and accounting system will go a long way in helping you manage your company. If you incorporate, recordkeeping and filing statements are mandatory, and it’s advisable you obtain the services of a Chartered Accountant or Certified General Accountant to assist you with your corporate income tax.
Have You Reached the Mandatory Threshold for the Goods and Services Tax (GST)?
If you are a small supplier and haven’t been charging and remitting GST, and your business is growing, you might consider registering with Canada Revenue Agency. Even if you have not reached the GST threshold, by registering, you can claim back the GST you paid on the expenses related to your business (although you must collect and remit GST from your customers as well).
Are You Protecting Your Intellectual Property?
As you build your brand, invent new products, or create artistic works or other forms of intellectual property, you’ll want to prove ownership and protect them as they are valuable business assets.
There are 5 types of intellectual property (IP) protection:
- Patent. Protects inventions, which can be a product, a composition, a process, or an improvement on any of these.
- Trademark. Protects your business or brand name, logo and design. Provides exclusive rights to words, symbols and designs that distinguish your business, or your products and/or services, from those of someone else.
- Copyright. Protects artworks such as books and maps, lyrics and musical scores, sculptures and paintings, photographs, films and tapes, and computer programs, games, and databases.
- Industrial design. Protects original shapes, patterns, or ornamentations applied to a manufactured article.
- Integrated circuit topographies. Protects the topography (i.e., three-dimensional configuration) design of the electronic circuits of an integrated circuit (IC) product.
Contact the Canadian Intellectual Property Office for more information and to register for the appropriate IP protection.
Are You Hiring Staff?
If you hire employees, you should contact the following agencies:
- Canada Revenue Agency (CRA). You must obtain a Business Number (BN) for payroll deductions. As an employer, you’re responsible for deducting the Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums and income tax from remuneration or other types of income you pay, remitting them to Canada Revenue Agency and reporting them on applicable slips. Contact CRA for more information.
- Employment Standards Branch. Be aware of your basic legal requirements as an employer. Contact the Employment Standards Branch for more information.
- WorkSafeBC. If you have employees or if you incorporate, you must register with WorkSafe BC.
Are You Considering Investment?
There are a number of options for your company to raise money from investors without going public. But, before going down this road, it is important to know the BC laws that apply to any company or other entity that raises money from investors.
There are two basic requirements of British Columbia’s securities legislation: registration and disclosure. To find our more read our Seeking Investment? Know the Rules article.
Are You Expanding into New International Markets?
Exporting can be a rewarding activity, but it should not be entered into lightly. Find out if you are export ready and learn the basics of the export process before you take your business abroad. Before you start exporting or importing, you must register your business for an export/import account.
Are You Importing Goods?
If the goods you need for your business are unavailable in Canada or cost less in another country, then you may want to import them. Importing commercial goods into Canada is a regulated activity and you’ll need some solid preparation to establish your import venture.
Before you begin importing, you should examine the regulatory and legal issues of importing, search out sources of importing funding and financing, find out how to import, and do your market research. The Canada Border Services Agency website is an excellent source of information.
Are You Considering Investment?
There are a number of options for your company to raise money from investors without going public. But, before going down this road, it is important to know the BC laws that apply to any company or other entity that raises money from investors.
There are two basic requirements of British Columbia’s securities legislation: registration and disclosure. To find our more read our Seeking Investment? Know the Rules article.
Are You Considering Foreign Investment?
You can strengthen your operations, gain access to new markets, and acquire new technologies, resources, and skills by investing abroad. Attracting foreign investment can be critical to your business as an added source of capital, of expertise, and as an important mechanism for technology transfer. Foreign investment opportunities are available through mergers, acquisitions, partnerships, joint ventures, strategic alliances, or new investments.