Do You Need a Lawyer to Incorporate in Canada, or File Yourself?

Do you need a lawyer to incorporate in Canada?

No. The law does not require a lawyer to incorporate federally or in Ontario, British Columbia or Alberta. In the first three, the owner can file online; in Alberta, a registry agent or authorized Alberta service provider submits the forms, and no lawyer is needed for that step.

For the filing steps, see how to incorporate federally, in Ontario, in British Columbia, in Alberta or in Quebec; federal or provincial incorporation helps you choose.

The government pages themselves point to advice for anything beyond the forms. Corporations Canada says its instructions do not replace legal advice. British Columbia recommends legal advice to confirm every requirement is met. Alberta recommends legal advice when deciding whether a corporation is the right structure.

A case stops being simple when there are two or more owners, family members as shareholders, more than one class of shares, an existing sole proprietorship moving in, a licensed profession, or a director who lives outside Canada. Those choices shape the articles, the share records and the director filings, and fixing them later costs filings and, sometimes, tax.

Gather before you file, whichever route you choose:

• Every owner's full name and address, and what each will pay for their shares.
• The share plan: how many classes, who gets which, and how many.
• The province where the business will mostly work, to choose federal or provincial.
• A registered office address that reliably receives mail (in Alberta, a physical address in Alberta).
• In Alberta, an agent for service: a person in Alberta who accepts legal papers for the corporation; it need not be a lawyer.
• Each director's name and address and whether they are a resident Canadian.
• For a federal corporation, the individuals with significant control (those who hold 25% or more of the votes or share value, or control the corporation in fact).
• A list of any sole-proprietor assets, contracts or accounts you plan to move in.

What does the incorporation filing create, and what is left to you?

The filing creates the corporation and nothing more. You receive a certificate of incorporation with the articles; federal, Ontario, BC and Alberta incorporations also receive a business number and corporation income tax account automatically (CRA).

Everything inside the corporation is still to do. Corporations Canada calls this the internal organization: the directors make by-laws (the corporation's internal rules for meetings, officers and signing), authorize share issues, appoint officers and make banking arrangements, often at an organizational meeting.

The filing puts the articles (in BC, a notice of articles), the registered office and the first directors on the public record; federally, it also records the individuals with significant control. Everything in the checklist below is left to the corporation.

The Canada Business Corporations Act, section 20 makes a federal corporation keep its articles and by-laws, shareholder minutes and resolutions, director notices, a securities register, director minutes and resolutions, and adequate accounting records. Failing to keep them without reasonable cause is an offence. Provincial acts set their own lists; BC's page names records books, a central securities register, a transparency register and share certificates.

What should any route deliver before you call it done?

Whoever does the work (you, an online service or a lawyer), the corporation is organized only when the items below exist and are signed. Filing yourself leaves all of them to you; with an online service or a lawyer, any item its package or engagement letter does not list stays with you, and so does the tax set-up unless it is included. Check a package against this list before you treat incorporation as finished.

Federal rules for each check are on the next steps and corporate records pages. What each item contains is in the minute book guide; if you already filed online, see what is left after incorporating online.

Is it worth going through a lawyer to incorporate?

It can be when the corporation needs terms that no government form writes for you. A single owner starting a new business with one class of common shares faces the fewest of these decisions, though the registries still suggest advice to confirm every requirement is met; each situation below adds a document or a decision that is hard to change later.

Whoever files, the government forms and fees are the same. Before paying any helper, ask which items in the checklist above it produces and who keeps the minute book.

What goes wrong when you incorporate yourself?

The registry checks the filing, but no one checks the internal steps, so those are what get missed. Each gap below runs into a rule the registry or statute sets.

• No shares ever issued. A person becomes a shareholder only when the corporation issues shares, and under the federal Act a share cannot be issued until it is fully paid. A shareholder's own promissory note does not count as payment (section 25). Without issued shares, the records may show no shareholder to pay dividends to or to report on the T2.
• No organizing resolutions or by-laws. Under the federal rules, the share issue must be recorded as a directors' resolution in the minute book; by-laws need later shareholder approval.
• Share classes that do not fit the plan. Federal basic incorporation gives one or two classes. Adding a share class later, for example for a spouse or an investor, means amending the articles.
• A registered office that cannot receive mail. Documents served there are treated as received, and federal annual return reminders are mailed to the registered office or another address on file unless you subscribe to email reminders.
• A missed first annual return. A federal corporation files within 60 days after each anniversary, starting the year after incorporation (Corporations Canada). Corporations Canada's policy is to start dissolving a corporation that has missed two years of returns, after a final notice. An Ontario corporation first files an initial return in the Ontario Business Registry within 60 days after incorporation, at no fee (Corporations Information Act, s. 2), then an annual return each year; BC sets its own annual report deadline; see the annual return guide.

Which steps after incorporating are tax, not legal?

Almost all of the tax set-up is separate from incorporating: only the business number and the corporation income tax account come with the filing. GST/HST, payroll, the books and the first T2 are yours to arrange, or an accountant's or bookkeeper's you hire, unless whoever handled the incorporation lists them in its engagement.

Directors in office when payroll deductions or GST/HST were due can be personally liable for amounts the corporation fails to remit, for up to two years after they stop being a director (Income Tax Act, section 227.1; Excise Tax Act, section 323).

The order to open accounts is in after you incorporate; the first tax year and its due date are in your first corporate tax year.

Does a lawyer or online service change the government fee?

No. The government fee is the same whichever route you take; a lawyer or online service adds its own charge on top.

• Federal: $200 online (Corporations Canada), then $12 for each online annual return.
• Ontario: $300 online or by mail (Ontario).
• British Columbia: $350, plus $30 for a name request unless you use the incorporation number as the name.
• Alberta: a government fee, listed in the province's registry agent product catalogue, plus the service provider's own fee.

The full table and yearly upkeep are in what it costs to incorporate in Canada.

Can the corporation deduct what it paid the lawyer or online service?

Partly. Fees for the incorporation itself are deductible in the year incurred, up to $3,000 in total for that incorporation, under paragraph 20(1)(b) of the Income Tax Act. Fees for other work, such as a shareholder agreement or a section 85 rollover, fall outside that paragraph, and their treatment depends on the work. Both are covered in deducting incorporation costs.

Example

These examples are illustrative; all figures are in Canadian dollars.

A BC web developer files online herself

She is the only owner and wants a word name. She pays C$30 for the name request and C$350 to file the incorporation application, C$380 in government fees. Before filing she adopts the sample articles and signs an incorporation agreement taking 100 common shares. After the certificate arrives, she pays C$100 into the company's account for those shares, signs her organizing resolutions, issues her share certificate, enters the shares in the central securities register and sets up the transparency register. Her first annual report is due within two months after the first anniversary.

Two Ontario founders hire a lawyer

One founder will put in C$100,000 of cash; the other brings the client relationships. They want a 60/40 split, a buyout if either leaves and a rule for major decisions. None of that is in the government filing, so they pay a lawyer for the share terms and a shareholder agreement. The C$300 provincial fee is the same either way. A share cannot be issued for a promise of future work: both the federal Act (section 25) and Ontario's (section 23) require it to be fully paid in money, property or past service first, so how the founder who puts in no cash pays for shares is a tax question as well as a legal one.

An Alberta contractor goes through a registry agent

He cannot file online on his own. He orders an Alberta NUANS report (a search of his proposed name against existing names) for his word name, then takes the articles, notice of address, notice of directors, agent for service notice, NUANS report and ID to a registry agent. He pays the government fee plus the agent's service fee and receives a certificate of incorporation, then an email when the business number is issued. The organizing resolutions and the share issue are still his to complete.

Different for you?

• Two or more owners, or an investor coming in: see partnership or corporation and get business formation help with the share terms.
• Your spouse or children will own shares, or you need several classes: read share classes when you incorporate before filing, and get business formation help.
• You are moving a sole proprietorship in: see moving a business into a corporation and the sole proprietor to corporation checklist, and get business formation help with the election.
• A director or owner lives outside Canada: see incorporating in Canada from abroad, a Canadian company for a founder living in China, incorporating as a newcomer or non-resident and CCPC status for a new corporation, and get business formation help.
• You are in a licensed profession: see professional corporations and get business formation help.
• You already incorporated online and are unsure what is missing: see after incorporating online and the minute book guide.
• The tax set-up after any route (accounts, books, first T2): see after you incorporate and books for a new CCPC, and get business formation help with the accounts, then bookkeeping and the corporate return.
• Annual returns were missed or the corporation was dissolved: see corporate annual returns and reviving a dissolved corporation, and get corporate tax help if T2 returns were missed too.
• You have not decided whether to incorporate: see sole proprietorship or corporation.