What You Need to Know About Starting Your Corporation?

Are you considering incorporating your business? Understanding the basics of forming a new corporation is crucial for a smooth and successful start. 

Roles Within a Corporation:

  • Shareholders: Shareholders are the owners of the corporation.
  • Directors: Directors oversee management and make strategic decisions for the corporation. 
  • Officers: Officers are responsible for the day-to-day operations and carrying out the strategic direction set by the board of directors. Examples of officers are the President, CEO, COO, etc. 

If you are the only person involved in your business, you will perform all of the above roles and will be the sole shareholder, director and officer.

Name of the Corporation:

You will need to consider a name for your corporation. This is often related to the name of your business, but it doesn’t need to be. There are certain criteria that corporate and business names need to follow. Your business name needs to go through a pre-approval process by the Corporate Registry before you can use it. If your name doesn’t include the following elements, your choice will probably be rejected and delay the start of your corporation’s operations. 

  • Distinctive term: A term that distinguishes your business from anyone else in the same type of business. For example, in “Bob’s Courier Service Ltd.” the distinctive term is “Bob’s”.
  • Descriptive term: A term that explains the type of business you will be operating. In our example, “courier service” is the descriptive term.
  • Legal ending: All corporation names must have one of the following terms or abbreviations at the end of its name: Limited or Ltd., Incorporated or Inc., Corporation or Corp.

Restricted words include, but are not limited to Saskatchewan or Sask, Operated By or O/B, A Division Of, Operating As or O/A, Doing Business As or D/B/A, Trading As or T/A. Brackets, profanity or obscene terms, or a year (i.e., 2024) are also not allowed unless the year indicates a successor to a current corporation.

Business Description: 

You’ll need to provide a detailed description of the business operations, including your offered products/services and the physical business address.

Shareholders: 

Shares are issued to the shareholders. They are evidence of ownership in the corporation. When incorporating, you should understand how many different classes of shares your corporation will need and what attributes will apply to each share class. 
It would be best if you also considered whether you will have other shareholders or investors in the future and set up the appropriate share structure when incorporating. There are several other attributes associated with shares that are determined on incorporation, such as whether or not each class of shares will attract dividends and share in the growth of the corporation. These are important attributes to consider for each class of share when incorporating.

Directors: 

Prepare a list of individuals who will serve as directors, responsible for strategic decision-making. Directors can be the same individuals as the shareholders. There are legal obligations and risks associated with being on a board of directors that you should be familiar with.

Officers: 

Compile a list of officers who will constitute the executive management team. Officers can be the same individuals as the shareholders and directors. Some common examples are the President, Vice-President, Secretary-Treasurer, CEO and COO. If you are the sole person involved in all levels of authority for the business, you will typically be designated as the President/CEO/COO and other officer positions can be left blank and assigned at any time in the future as needed.

Registered Office: 

The Registered Office of a Corporation is where the minute book and corporate records will be kept. This is also where the Corporate Registry will send the corporate annual return each year. The corporate annual return is not the same as your corporate tax return. The Corporate annual return needs to be filed each year to keep the corporation active. Failure to file the corporate annual return on time each year will result in your corporation being struck from the corporate register, which will require you to incur additional and unnecessary costs to revive the corporation.

If you intend to file your corporate annual return yourself each year, your business address or personal residence must be listed as the Registered Office. The address must be a street address and cannot be a post office box. Alternatively, Gates Law can act as your Registered Office, maintain your corporate records and file your annual return.

By understanding these key points, you’ll be better prepared to start your own corporation. There is much more to the incorporation process than just the online registration with the Corporate Registry operated by ISC. If you need assistance with the incorporation process, Gates Law is here to help. Contact us today to get started!

Disclaimer: This Blog is intended to provide readers with general information. Each client’s circumstances and legal solutions might vary. For further details, please reach out to us to learn more.