Starting a business is a big step. It requires a lot of work and the proper support and information to make it a success. Part of this work also involves considering the legal requirements for starting a business in Canada, and we're going to tell you more about that in today's post.

Please note that this post is for informational purposes only. Contact a corporate lawyer, including those at MerGen Law LLP in Calgary, for specific legal guidance.

Register Your Business

To begin, you'll need to register your business. You can do this by filing the correct paperwork with the government and getting a federal tax ID. This process can vary depending on your province or territory, so it's essential to check with the government website for your specific area and seek the advice of a qualified tax professional.

Choosing the Right Business Structure

Another critically important legal consideration for starting a business involves choosing the right business structure. The three most common business structures in Canada are sole proprietorships, partnerships, and corporations. (Access our corporation information questionnaire here).

Corporations

Whether you incorporate your business federally or provincially, you'll need to follow the rules and regulations set out by the applicable legislation. This includes filing articles of incorporation, creating corporate bylaws, and holding annual shareholder meetings. 

One of the advantages of incorporating is it can help protect your personal assets if someone sues your business. The downside is that it can be more expensive and time-consuming to set up a corporation than other business structures.

(Learn more about the advantages of incorporating here)

Choosing a Jurisdiction: Federal or Provincial Incorporation?

Federal Incorporation

One can incorporate federally in Canada pursuant to the Canada Business Corporations Act (RSC, 1985, c. C-44). Federal incorporation allows for a company to carry on business in all provinces and territories. Federal incorporation protects your business name across Canada. There is still a requirement to register in the province in which the corporation does business.

Provincial Incorporation

Incorporating a business provincially means the business can only conduct operations in the province in which it is incorporated. In Alberta, the governing legislation for provincial corporations is the Business Corporations Act (Alberta), RSA 2000, c B-9. Provincial incorporation protects the name of the business in that province only.

Sole Proprietorships

A sole proprietorship is a business one person owns and operates. It's the simplest legal structure for a new business and can be less expensive than incorporating. However, sole proprietorships offer the owner less legal protection than other business structures.

Partnerships

A partnership is a business two or more people own and operate. Partners share the profits, losses, and management of the business. Like sole proprietorships, partnerships can be less expensive than corporations. But similar to sole proprietorships, partners have unlimited liability for the debts and obligations of the business.

The business structure you choose will have serious legal and financial implications, so it is important to speak with a corporate lawyer before making a decision.

(We offer small business legal services. Learn more about them here)

Licenses & Permits

You'll also need to apply for any permits or licenses necessary for your type of business. For example, if you're starting a restaurant, you'll need a food handling license. If you're selling alcohol, you'll need to get a liquor licence. And if your business is going to produce pollution, you'll need to obtain an environmental permit.

The three different levels of government also require other licenses and permits. Depending on the nature of your business, this process can be challenging. This highlights why it's beneficial to have the support of a corporate lawyer to walk you through it.

Once again, requirements differ depending on business location. So, be sure to research what's necessary for your business. As with choosing a business structure, it's essential to speak with a corporate lawyer about which permits and licences you need for your particular business.

Employees

Once you have all of the necessary documentation in order, it's time to start thinking about your employees' legalities. This includes drawing up contracts, setting job descriptions, and understanding your obligations as an employer.

Learn More About the Legal Requirements for Starting a Business

Now that you know more about the legal requirements and options for starting a business in Canada, it's time to put your plans into action. If you have any questions or need legal assistance, the team at MerGen Law LLP is here to help. Contact us today to begin!