Why Should I Pay a Lawyer to Incorporate My Business?

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When you decide that it’s time to incorporate your business, you’ll be faced with a choice: do you file the incorporation yourself, online? Or do you pay a lawyer to do it for you?

For many people, this choice comes down to price. Yes, you will save money by incorporating your business yourself. You can’t get away from all charges: the BC government charges $350 to incorporate a company, plus a $30 name reservation fee (unless you want to operate as a “numbered company” without a name). Otherwise, the only up-front cost to incorporating yourself is your time.

So, why on earth would you pay a lawyer to incorporate? Because we – the lawyers – are the experts. For the reasons that follow, you’ll see how using a lawyer to incorporate benefits your company and its future growth.

We Give Your Company Robust Articles

When setting up your company, you need to create a set of rules called the “Articles”. The Articles set out, among other things, how a company is governed and how business is conducted, as well as outlining any rights and restrictions that shares have (more on that later).

While the BC government does publish a standard set of Articles, you have to actually adopt those Articles (called the “Table 1 Articles”) when you incorporate your company – it doesn’t happen automatically. For this reason, a self-incorporated company often doesn’t have any Articles, simply because the incorporator missed the crucial step of adopting the Table 1 Articles. Without Articles, a company is technically in breach of the Business Corporations Act and, while this admittedly isn’t the end of the world, this will present a problem when the company seeks financing, tries to attract investors, or is sold. Even if your company does adopt the Table 1 Articles, these general-purpose provisions may not suit your business. Maybe you want to conduct directors’ meetings differently, or maybe you want a different process for approving share sales and transfers. Going to a lawyer to incorporate means that you’ll get a thorough, organized, and legally compliant set of Articles that is fine-tuned to your company’s needs.

We structure your company for future growth

Another aspect of incorporating that’s often overlooked is the company’s share structure. For all but the simplest businesses, you will want to have different classes of shares, each with their own purposes. Some shares may be for voting; some may be for receiving dividends. Some might be given to family members, while others could be sold to investors. Every share class in your company should have its own set of “special rights and restrictions”, which go in the Articles and specify things like voting rights, dividend entitlements, money received on wind-up of the company, and so on.

Yet, when incorporating online, many business owners only put in one type of share. These shares are usually simple “common” voting shares. This setup is fine enough for a company with a single shareholder. But what happens if you want your spouse to have shares for dividends? Or if you want to bring in partners? Unless you’ve incorporated with a robust share structure, you can’t – at least, not without changing the share structure, which costs money to file (and, of course, you need to write the rights and restrictions for the shares). Having a lawyer do your incorporation ensures that your company has different types of shares and is prepared for future expansion or change.

We Keep Your Company in Good Standing

Every year, every BC company needs to file something called an “annual report”, which is essentially a notice to the government that says “hey! We’re still alive!” If you miss filing one annual report, your company falls out of good standing. If you miss filing two annual reports, your company is dissolved, which essentially means that it no longer exists. It’s possible to have a dissolved company reinstated (this is called a “restoration”), but it’s complicated, time-consuming, and expensive. When you incorporate with a lawyer, you have the option of keeping your company’s books at that lawyer’s office, meaning that your annual report gets filed every year, your company stays in good standing, and no unexpected interruptions to your business will happen due to a failure to file the proper paperwork.

Coming to a Lawyer Lets You Focus on Your Business

Incorporating your company through a lawyer, for a modest one-time fee (which you can write off), will help to get all the legal nuts and bolts of your business in place. This, in turn, lets you focus on what you’re best at – running your business – while leaving the legal work to the experts, ensuring that your company has the capacity to handle future growth.

If you’d like to incorporate a company, or if you’ve already incorporated a company but want some help fixing up the books or getting back into good standing, contact us today for a free consultation.

Paperless world raises issues

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BY JOHN BECKER, THE TIMES JUNE 27, 2013

Paper is an expense. It costs money to produce, store, file, and destroy.

There are more efficient ways to make documents portable and sharable.

So, it’s no wonder that many companies are abandoning paper altogether and moving to a paperless office, but there are legal issues to consider.

How do you go paperless?

The answer seems simple: buy a scanner.

Whether you use Adobe Acrobat or an enterprise document management system with a central server, you will have a functioning system for scanning and managing electronic documents.

Practically speaking, even this basic setup will allow you to work with electronic documents.

Legally speaking, though, you may still need to keep some paper documents. But, wasn’t getting rid of the paper the goal to begin with?

A key question to ask is whether your paperless office setup satisfies the strict requirements of the provincial and federal governments. If you are governed by a professional organization, you should also check to see if they have any requirements.

The provincial and federal governments each have different requirements for electronic documents.

The rules vary and depend on the type of document and its intended use.

The Canada Revenue Agency (CRA) requires that document scanning systems comply with several national standards.

You must purchase these national standards in order to find out what they are.

One can only imagine what would happen if a company scanned and shredded its financial records, only to have the CRA determine in an audit that they are legally insufficient.

Another key consideration is whether the electronic document will stand up in court.

The courts’ acceptance of electronic documents is evolving. Any paperless-office system should be designed to ensure that all electronic documents will be admissible in court.

If you have an electronic contract that you want to enforce, you will want to ensure that the court will find it to be reliable and admissible as evidence.

On top of this myriad of legal considerations, there are privacy issues.

As soon as a document becomes electronic, it is susceptible to viruses and accidental disclosure.

Proper procedures should be put in place to minimize the risk of (and any liability from) losing a phone or accidentally emailing a document to the wrong person.

Companies that have a paperless office, or are considering implementing one, should carefully consider whether the system is legally sufficient for their specific purposes.

– with assistance from articling student Garrett Munroe

John Becker has run his own law firm in Pitt Meadows for more than 30 years, focusing his practice on corporate commercial real estate and business succession planning. Send questions to: info@beckerlawyers.ca

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