Corporate Structuring and Relocation

Types of Corporate Structures

1. Sole Proprietorship: It is the easiest form of business; in this form of business organization, the owner has complete control and unlimited liability for all operations and debts incurred for them. There is no distinction between owned and borrowed funds, and thus that the proprietor incurs all levies to offset all kinds of expenditures from operations.


2. Partnerships: In Partnerships, ownership is shared as well as the profits and liabilities among two or more persons. There is a kind of partnership in which the partners are all equally liable; there also exists limited liability partnerships where some of the partners have only partial personal liabilities.

The provincial statutes in Canada primarily recognize three types of partnerships:


• General Partnership: Partners have equal responsibility to run and manage the business. Partners’ personal assets may be used to meet partnership debts.


• Limited Liability Partnership: Here, the partners cannot be held personally liable for debt arising from the partnership or the acts of one another. Professional service firms that this ownership structure has been seen are: legal, accounting firms.


• Limited partnership: Comprises general and limited partners. General partners run the business and are liable without limitation. The liability of limited partners is restricted to their capital investment in the company. Limited partners usually do not engage in management.


3. Corporation: A legal entity separate from ownership, and given limited liability protection. Incorporation typically involves filing the articles of incorporation, followed by ensuring compliance with various regulatory requirements, as well as appointing the board of directors.


4. Not-for-profit corporations: Canada’s not for profit organisations vary in its size and purpose. Governed by the Canada Not-for-profit Corporations Act (NFP Act), objectives like good corporate governance and flexibility are promoted. This is a way through which individuals and groups contribute to their communities. It is a legal entity enabling such people to pursue charitable, educational and other such community driven missions along with receiving tax benefits.


5. Cooperative: A cooperative is an organization owned by its members who share similar social, cultural or economic needs. Here, each member gets the right to vote and the primary goal is to create a business to give back to the community in which it operates. The reason that this model is so different is because, its revenue is determined by a board of directors, and it can be adapted to different organizations.

Corporate Formation Process

1. Select Business Structure: You will have to decide what form suits best for your business. Liability and income tax considerations are a part of the decision, as are management preferences.


2. Register the Business Name: Ensure that the chosen name is unique and complies with local regulation. Filing with a government office is usually entailed in registering the name.


3. Articles of organization or incorporation: Depending on the structure of the business, one will be necessitated to submit articles and organization of the company or articles of incorporation for the corporations. These documents consist of general information about the business such as the business name, business purpose, format, black and white and more.


4. Obtain licenses and permits: It is also important to apply for a number of licenses and permits which are required by other businesses before they can operate legally. Ensure all papers are obtained before commencement.


5. Create a Board of Directors or Managers: In a way it is mandatory for a corporation to have a board of directors that will be able to run the business of the firm.


6. Abide by Ongoing Requirements: After formation of the business there will be more demand of making compliance on a regular basis. Some of the tasks that it encompasses include preparation of annual returns, keeping of sealed records and taxation.

How Business Lawyers Help in Corporate Structuring?

1. Legal Advice: A business lawyer gives advice on what sort of corporate structure is best for your enterprise according to your plans for the future and the degree of personal risk that you are willing to take.


2. Drafting and Filing Documents: They also process and prepare documents involved in the establishing of a corporation or partnership including articles of organization, articles of incorporation, partnership agreements, preparation of minute books, among others and make sure that such documents meet the legal requirements.


3. Tax Planning: Corporate lawyers work with tax consultants to achieve the goal of reducing taxes for example through proper planning and choosing the right legal structure of the business.


4. Ongoing Compliance: A business lawyer assists in managing legal requirements that include preparing and submitting annual reports or license’s renewal and updating the company’s register.


5. Dispute Resolution: In case of any disagreement, a corporate lawyer has the back of your business; this includes disagreement between partners and with the law enforcement agencies.

Conclusion