DID YOU KNOW? Incorporations: you get what you pay for.

It just makes sense that people looking to incorporate a company want to do it on the cheap. They’re just starting out, right?

The total cost to register a do-it-yourself corporation with Service New Brunswick is approximately $400.00. If, on the other hand, you use a search house (the folks who do your company name search) to do it for you, they may charge you approximately $600.00.

By comparison most law firms will charge approximately $1,200.00 for an incorporation of a standard company with one class of unlimited common shares.

It’s tempting to go the cheap route.

But here’s the thing. I have recently come across a number of clients whose companies have been incorporated without using the services of a lawyer. In more than a few of these cases, I have found their corporations to be deficient in share structure, and not in compliance with the Business Corporations Act.

Here’s why. Service New Brunswick and search house incorporations only supply the base incorporation. In many cases, the share structures created do not adequately consider the particular business of the individuals involved, and their personal situations – and they do not actually supply the legal documents necessary to add the individual owners as shareholders of the corporation. This means the protection of the corporation is not realized.

Here are the steps of a successful incorporation:

  • Complete a name search and confirm that the company name will be accepted by the corporate registry.
  • Draft the application for incorporation. This requires consideration of the various shareholders involved, any tax considerations pertaining to dividends, future income delivery methods and management considerations, amongst other things.
  • Draft the necessary resolutions to appoint directors, and issue shares to the shareholders. Until shares are officially issued by the corporation, the shareholders do not have the protections of the corporate structure and are exposed to any liability they would attract in absence of the corporation.

In the event of a lawsuit or Canada Revenue Agency audit, the advantages of a corporation – such as limited liability to shareholders and directors, perpetual existence of the corporation, and tax advantages – are certainly worth the cost of doing it right.

That’s why we say it’s important to incorporate with the assistance of a lawyer.


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