A corporation in British Columbia is a legal “person,” which can be created under provincial business corporation act. As a person, a corporation has certain rights and obligations such as the right to do business and the obligation to pay taxes. Sometimes one hears of a law referring to “natural persons.”That is to differentiate them from corporations that are persons, but not natural persons.
Business corporations were invented hundreds of years ago to promote risky ventures. Prior to the use of corporations, persons engaged in business faced the possibility of unlimited liability. By using a corporation, many people could put up a fixed sum of money for a new venture such as a voyage to explore the new world. If the venture made money, they shared the profits. If the venture went into debt, the most they could lose was the initial investment they put up.
The reasons for having a corporation are the same today. They allow investors to put up money for new ventures without risk of further liability. While our legal system is making more and more people liable for more and more things, the corporation remains one of the few innovations that has not yet been abandoned
Before forming a corporation, you should be familiar with these common corporate terms:
About Shareholders of British Columbia Corporations:
A shareholder is a person who owns stock in a corporation. In most small corporations the shareholders are the same as the officers and directors, but in large corporations, most shareholders are not officers or directors. Sometimes small corporations have shareholders who are not officers.
About Officers in British Columbia Corporations
Officers are usually the president, secretary, treasurer, and vice president. These persons run the day-to-day affairs of the business. They are elected each year by a vote of the board of directors. In British Columbia, one person can hold all of the offices of a corporation.
About the Board of Directors in British Columbia Corporations
The board of directors is the controlling body of a corporation that makes major corporate decisions and elects the officers. It usually meets just once a year. A corporation in British Columbia can have one director (who can also hold all offices and own all the stock). In a small corporation, the board members are usually also officers.
About Registered Agents in British Columbia
The registered agent is the person designated by the British Columbia corporation to receive legal papers that must be served on the corporation. The registered agent should be regularly available at the registered office of the British Columbia corporation. The registered office can be the corporate office or the office of the corporation’s attorney or another person who is the registered agent
Articles of Incorporation of British Columbia Corporations
Articles of Incorporation is the name of the document that is filed with the British Columbia Corporate Registries Office to start the British Columbia corporation. In most cases, it legally needs to contain only five basic statements. Some corporations have lengthy articles of incorporation, but this just makes it harder to make changes in the corporate structure. It is usually better to keep the articles short and put the details in the bylaws.
ByLaws of British Columbia Corporations
Bylaws are the rules governing the structure and operation of the British Columbia corporation. Typically the bylaws will set out rules for the board of directors, officers, shareholders, and corporate formalities.
Before forming a new corporation in British Columbia, the business owner or prospective business owner should become familiar with the advantages and disadvantages of incorporating a new company.
Advantages of Corporations in British Columbia
The following are some of the advantages that a corporation has over other forms of businesses such as sole proprietorships and partnerships in British Columbia.
Limited Liability
The main reason for forming a corporation is to limit the liability of the owners. In a sole proprietorship or partnership, the owners are personally liable for the debts and liabilities of the business, and creditors can go after all of their assets to collect. If a corporation is formed and operated properly, the owners can be protected from all such liability.
Continuous Existence
A corporation may have a perpetual existence. When a sole proprietor or partner dies, the assets of their business may go to their heirs, but the business does not exist any longer. If the surviving spouse or other heirs of a business owner want to continue the business in their own names, they will be considered a new business even if they are using the assets of the old business. With a partnership, the death of one partner may cause a dissolution of the business.
Easy of Transferability
A corporation and all of its assets and accounts may be transferred by the simple assignment of a stock certificate. With a sole proprietorship or partnership, each of the individual assets must be transferred, and the accounts, licenses, and permits must be individually transferred.
Transfer of Ownership
By distributing stock, the owner of a business can share the profits of business without giving up control. This is done by keeping a majority of stock or by issuing different classes of stock some with, and others without, voting rights.
Ease of Raising Capital
A corporation may raise capital by selling stock or borrowing money. A corporation does not pay taxes on money it raises by the sale of stock.
Separate Recordkeeping
A corporation has its own bank accounts and records. A partner or sole proprietor may have trouble differentiating which of his expenses were for business and which were for personal items.
Tax Advantages
There are some tax advantages that are available only to corporations. Some of these are:
- Medical insurance for your family may be fully deductible.
- A tax-deferred trust can be set up for a retirement plan.
- Losses are fully deductible for a corporation whereas an individual must prove there was a profit motive before deducting losses.
Ease of State Planning
With a corporation, shares of a company can be distributed more easily than with a partnership. Different heirs can be given different percentages, and control can be limited to those who are most capable.
Prestige
The name of a corporation sounds more prestigious than the name of a sole proprietor to some people. John Smith d/b/a Acme Builders sounds like one lone guy. Acme Builders, Incorporated, sounds like it might be a large operation. No one needs to know that it is run out of a garage.
Separate Credit Ratings
A corporation has its own credit rating, which can be better or worse than the owner’s credit rating. A corporate business can go bankrupt while the owner’s credit remains unaffected, or an owner’s credit may be bad but the corporation may maintain a good rating.
Disadvantages
Extra Tax Return
A corporation is required to file its own tax return. This is a bit longer and more complicated than the form required by a sole proprietorship and may entail additional expenses if the services of an accountant are required. A partnership must also file its own tax return, so there is no advantage or disadvantage over a partnership as far as tax returns are concerned.
Annual Report
A corporation must file a one-page annual report with the British Columbia Corporate Registry Office (which lists names and addresses of officers and directors)
Separate Credit Rating
The owners of a corporation must be careful to keep their personal business separate from the business of the corporation. The corporation must have its own records and have minutes of meetings. Money must be kept separate. But in every business, records should be separate, so the corporate structure might make it easier to do so.
Checking Accounts
Checks made out to a corporation cannot be cashed; they must be deposited into a corporate account.
British Columbia Incorporation Service. Fast, Easy, Online
Ecompanies Canada offers fast & easy British Columbia online incorporation and business registration services.
At Ecompanies Canada we help you step-by-step and take care of the entire business registration process from start to finish. Incorporating a new business in British Columbia with us is fast, easy and takes just minutes.
Our British Columbia Incorporation Service Includes:
Name availability check
We perform a preliminary search to determine if your name choice is available or if it is too similar to one already registered.
Preparation of Articles of Incorporation
Preparation of the initial document that establishes the existence of the corporation.
Preparation of Notice of Directors
Preparation of notice of directors that defines who is in charge of your corporation
Preparation of Notice of Address
Preparation of notice of address that tells the government where your business can be reached
Filing of Incorporation Documents with the Registries Office
Submission of the incorporation documents to the registries office in a timely manner.
Coordinate all Communication with the Registries Office
Ensure there are no issues with the filing and continued assistance until filing is complete.
Personalized Bylaws
We will build a standard set of bylaws that are used by a corporation to detail how it is managed and operated.
Minutes and Resolutions
We will build many of the basic resolutions a corporation uses to demonstrate decisions made or activity taken by it.
Satisfaction Guarantee
If you order a service from us and for any reason are not satisfied, simply let us know within 24 hours from the time of your order and receive a full refund of our service fees.
Preparation of BN Application
We will complete the necessary forms required by the CRA to obtain your corporation business number.
Incorporate in British Columbia. Our British Columbia Incorporation Service Includes:
Incorporate Today your new British Columbia Corporation for only $99 plus government fees.
https://www.ecompaniescanada.com/british-columbia-incorporation-service/
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