If you are an entrepreneur, incorporating a company in British Columbia (BC) is a significant decision that you must approach with caution. While it may appear to be intimidating, understanding the steps involved and the benefits of incorporation will assist you in making an informed decision. This comprehensive guide will follow you through the process of incorporating your business in British Columbia, stressing crucial considerations and providing valuable insights along the way.
What is Incorporation?
Incorporation is the process of forming a legal entity that is distinct from its owner(s). A corporation, unlike a sole proprietorship, has the same legal rights and obligations as a person under Canadian law. Incorporating your firm in British Columbia can bring several benefits, including less liability and a lower tax burden.
Steps to Start a Company in British Columbia
Incorporating your business in BC involves several essential steps. You can make sure the incorporation process goes smoothly by following these steps.
Select a Company Name and Make it Reserve
Choosing a good company name is a crucial first step in the incorporation procedure. You can reserve and check the availability of the business name you want in a few different ways.
- Internet Searches: Do thorough searches on the internet, focusing on finding businesses in BC or other parts of Canada that already have names that are close or the same. International companies with names that sound alike might not stop incorporation, but in the future, trademark problems could come up.
- Trademark Search: Check to see if someone has already filed a trademark for the name you want. The Canadian Intellectual Property Office (CIPO) has an online search tool that you can use to find names. Think about different spellings, and keep in mind that logos are often unique to certain products or services.
- Legal Requirements: Find out what the rules are in British Columbia for picking a name for your business. There should usually be a unique part, a descriptive part, and a formal ending like “Inc.,” “Ltd.,” or “Corp.” in a business name. In British Columbia, you can list three possible names on your application to help it get accepted.
- Domain Name Search: Check to see if there is a domain name that is available that fits your business name. Getting a matching domain name isn’t required by law, but it’s usually a good idea for online visibility and branding.
Name Approval Request
Once you have selected a preferred corporate name, you need to formally request its approval from BC Registry Services. Fill out the Name Request Form and list up to three possible names for your company before you file your articles of incorporation. Rank your choices, and the first choice will be approved unless any issues arise during the examination. Even though you don’t have to do a NUANS search, you should.
Filing the Incorporation Application
Getting the incorporation papers ready and filing them is the most important step. In BC, there are three main ways to make your business official:
- With OnDemand International: OnDemand International has a simple and low-cost way for you to organize your business. OnDemand International makes it easier to incorporate a business by providing clear instructions, eliminating the need for paperwork, and customizing company organizational documents. It also lets you keep your business up to date automatically and store all of your legal papers safely online.
- Do-It-Yourself (DIY): You can fill out the papers for incorporation yourself, but it’s not a good idea because they are hard to understand and don’t include legally necessary corporate organizational documents. Doing it yourself can lead to missing or incomplete paperwork that can affect the structure and safety of your business.
- Traditional Method: Law Firms: Using a local law firm is a traditional way to incorporate your business. They will have experienced pros who can help you through the process. But this choice can be pricey, ranging from $1,500 to $2,000 or more, based on how complicated it is.
Benefits of Starting a Business in British Columbia
Incorporating your business in BC offers various benefits, but it’s important to consider the potential drawbacks as well.
Benefits of Incorporation
- Limited Liability: When you incorporate, you split your assets from your business’s debts and liabilities. This protects you in case of lawsuits or debts.
- Tax Advantages: Corporations have different tax rates and structures than people, which could mean they pay less in taxes.
- Getting Money: Businesses that are incorporated can sell shares to investors, which makes it easier to get money for growth and expansion.
- Transferability: It is easy to give someone else ownership of a company, which makes planning for the next owner easier and allows for changes in ownership.
- Continuity: Unlike sole proprietorships and partnerships, corporations last forever, which means they can stay stable and grow over time.
Why Incorporate a Company in British Columbia?
There are two key reasons to consider incorporating your business in BC as an entrepreneur or small business owner: minimizing your liability and lowering your tax burden. However, there are other reasons why incorporating a firm in BC may be the best option for you.
You do not require Canadian Citizenship
While many Canadian provinces and the federal government need at least one director to be a permanent resident or a Canadian citizen, British Columbia does not have such residency or citizenship requirements. This adaptability makes British Columbia an appealing option for international entrepreneurs who do not need to associate with a Canadian director. It’s important to remember that the company’s head office must have an address in British Columbia, even if it’s just a virtual office or a P.O. box.
Less Documentation and Fees than Federal Incorporation
When forming your company, you can select between provincial and federal incorporation. When opposed to federal incorporation, choosing provincial incorporation in BC results in less overall paperwork and expenses. You are not restricted from operating in other provinces or countries if you incorporate provincially; you can register your corporation in those jurisdictions as your operations develop.
In British Columbia, is it better to incorporate on a provincial or federal level?
There are two levels of incorporation in Canada: provincial and federal. Incorporating provincially in British Columbia offers you rights solely within that province. Your organization will not receive the same benefits across Canada. Federal incorporation is required to enjoy nationwide benefits and preserve your corporation’s name throughout Canada. While the BC Business Corporations Act governs incorporation in British Columbia, the Canada Business Corporations Act governs formation in Canada.
Conclusion
Incorporating a business in British Columbia is a must for entrepreneurs who want to limit their responsibility, lower their tax bills, and get other benefits. You can make an informed choice about whether incorporation is right for your business by taking the necessary steps and thinking about the pros and cons. Whether you use an online platform like OnDemand International or more traditional ways, make sure you follow the rules and keep your company’s status up to date to get long-term benefits.