While you may not know exactly how to incorporate in B.C., you should know the benefits. The benefits of incorporating your business include limited liability. There are several benefits of being an LLC, but some cons should also be considered before you decide to incorporate in B.C., including operating in another jurisdiction and the annual report. Learn more about the pros and cons of incorporating in B.C. by reading this article.
Limited liability is a benefit of incorporation
Incorporation in British Columbia can provide numerous benefits to small business owners. Among these are limited liability, which limits the personal liability of company directors. The benefit of limited liability is that a company’s creditors cannot sue its directors or its officers individually. Moreover, personal guarantees may void limited liability protection. As a result, many lenders require personal guarantees from business owners. Hence, personal liability may be removed completely.
Traditionally, there are two main types of business structures in British Columbia: partnerships and corporations. The decision to incorporate depends on the objectives and personal needs of the owners of the partnership. For small businesses, the cost of traditional incorporation may be prohibitive. Furthermore, the process involves an appointment with a traditional law firm, and time spent picking up and couriering documents. Lastly, the cost of incorporation through a traditional law firm is prohibitive if you do not have the necessary resources.
Another benefit of incorporating in British Columbia is its tax benefits. This province’s tax system permits corporations to be incorporated and to issue dividends and pay dividends to shareholders. Moreover, the tax implications of incorporating in British Columbia are less than in other jurisdictions. For example, companies can elect to incorporate in British Columbia if their directors, officers and shareholders are not Canadian citizens. This option can help foreign companies expand their market.
Another advantage of incorporation in British Columbia is the limited liability of partners. Since limited partners are only responsible for their contributions, the liability of the limited partner is limited to the amount of money they contributed to the company. As an example, a limited partnership will be formed after extensive information is filed with the provincial government. Incorporating a business in British Columbia creates a legal entity known as a limited company or corporation. This type of entity also applies to non-profit societies and corporations.
The limited liability of corporations also makes a corporation more financially secure. As a separate legal entity, the corporation can incur debt and pay taxes without the owner being personally responsible. Because of this, a corporation is less likely to face lawsuits and creditors. In addition, it is easier to transfer ownership of a corporation than a sole proprietorship. Limited liability also means that a corporation does not have a time limit on its existence.
Directors are responsible for supervising and administering the corporation’s affairs
Board members have a variety of responsibilities, from overseeing financial matters to supervising the administration of a corporation’s affairs. Generally, directors are elected by shareholders. There are a few exceptions to this rule, however. One example is if an executive director is hired without doing a background check. While this may seem like a good idea, it is actually a breach of duty.
The most important role for a director is to serve the interests of all shareholders. Consequently, it is crucial that the director has integrity, sound judgment, and a clear, objective mind. Moreover, directors should have relevant business experience to provide a clear perspective on the corporation’s business strategy, significant risks, and challenges. Effective corporate governance calls for a majority of independent directors.
When a corporation is formed, the articles of incorporation or bylaws usually name the board of directors. Some corporations choose to make officers of the corporation voluntary. A board of directors can designate a chief executive officer (CEO) or an executive director, but not both. In most cases, the CEO is the CEO. In addition, a chief operations officer (COO) oversees the daily operations of the corporation. The COO reports directly to the CEO.
If the directors wish to replace an existing board member, they must amend the corporation’s bylaws. The certificate of incorporation must permit the change of directors. The board must also vote to elect a new chair. The board of directors must have a vote of at least two-thirds. In addition to the board members, a chairperson must be independent. In addition, the board members should have an independent agenda.
Annual report is required
When you incorporate in BC, you will need to file an annual report to keep your company in good standing. It is important to file this report on time, or the Registrar of Companies will strike your company and prevent it from continuing to operate. You can find the forms you need online on the government’s website. To file your annual report online, visit the website linked below. Be sure to update all of your contact information.
As with other forms, your office address must be updated on a yearly basis. You must submit Form 2 – Notice of Change of Address. Your annual report is vital for receiving essential information from the government and can cause legal problems if you fail to file it. If you’re thinking of starting a business in BC, don’t let the process discourage you! Start now by filing your annual report today.
After you’ve filed your annual report, be sure to print it out and save it on your computer. You can also save it to a hard drive or place it in your corporate records book. Then, once your annual report is complete, you’ll need to submit it to the Corporate Registry. Remember, you can also file your annual report on paper if you want. Once you file, you’ll receive a reminder in the mail, but if you can’t find it, you can always view it online.
As for the officers of your company, you’ll need to appoint them during the AGM. Appointment of these officers is essential for the company to keep its records in good standing. Even if your company has no corporate officers, it’s useful to choose a “President” position when dealing with third parties. In addition, you’ll need to sign a consent director resolution.
If you don’t keep up with these requirements, your company could be penalized and removed from the corporate register. If your company is removed from the corporate register, it can’t be revived, which means you’ll have to spend a lot of money reviving it. As a result, it’s important to keep up with the minimum requirements when incorporating in BC. Moreover, it’s crucial to keep updated with these requirements as your business grows and changes.
Operating in another jurisdiction is permitted
Founded in another jurisdiction, but want to operate in BC? You can. While you can incorporate a BC company as a federal corporation, you need to file annual returns with Corporations Canada. In addition, companies incorporated under federal law have to hold an annual general meeting, although a resolution signed by all shareholders can serve as a substitute. Finally, you must file annual reports with corporate registrars in every province in which you plan to operate.
Once incorporated, you need to choose a name for your new company. It should not include any prohibited words or phrases. It should also not be too common or too generic. To avoid confusion, you can use a distinctive element such as a number. For example, if your new company is named “345678 B.C. Ltd.”, you can use it as the company name.
Once your company is approved, you can proceed with operating in the other jurisdiction. Federally incorporated companies will have their names reserved for their home Province, while provincially incorporated companies will be permitted to operate in any jurisdiction across the country. While federal incorporation allows you to do business in any Province, you should note that operating in another jurisdiction may limit your business’s potential. When operating in BC, be sure to select a legal name that best suits your business.
Among many other things, David A. Grantham is a contributing author to UmassExtension West Vancouver Blo. He is a renowned expert on real estate in BC.
Born in North Vancouver, Louisiana, Dr. Grantham grew up in Lower Lonsdale. He then went on to complete his business degree at the University British Columbia. As of this writing, Grantham has completed over 100 projects, including the development of a high rise building in Vancouver.
He is a husband, father, son, brother, and friend. He was a dedicated outdoorsman and enjoyed sports such as hunting, fishing, scuba diving, and snow skiing. His wife, Alison Grantham, and their two daughters survived him. He is survived by his wife Alison Martin Grantham and two daughters.