OVERVIEW:
· Sole proprietorships are the most common and simple form of business structure. Under this type of business structure, one person owns the assets of the business and is also personally responsible for its liabilities. The owner can employ others to help in operating the business, but the owner usually manages the business himself or herself. There are few formal legal requirements to establish sole proprietorships, and they are much cheaper to create than corporations. An Ontario sole proprietorship must have its registered business address located within the Province of Ontario.
LEGAL REQUIREMENTS:
· The only legal requirement in establishing a sole proprietorship is to obtain certain licenses which are required for specific types of businesses. These licenses can range from a Vendor's Permit for collection of the Retail Sales Tax to a municipal permit for the operation of a home based business. Licensing requirements vary depending on the specific region in which the business will operate.
· If the sole proprietorship will operate under a business name other than the owner's, the business name must also be registered under the Business Names Act. This registration is relatively simple to complete and must be renewed every five years. Although there is no formal legal requirement to conduct a search of a proposed business name, it is a good idea to do so to be sure that the name which you want to use is not identical or confusingly similar to another business name already registered. This will avoid potential law suits down the road.
Monday, January 5, 2009
Monday, December 8, 2008
Did you know..Change in Directors for a Corporation
Did you know...
That you should notify the Canada Revenue Agency (CRA) when directors of your corporation change?
Avoid the possibility of service delays by ensuring that information on the incoming directors is added to our system and information on the outgoing directors is removed. Once the information has been updated, the new directors will be able to speak with CRA agents on the phone and submit written requests, such as Form RC59, Business Consent Form, on behalf of their corporation.
Directors can also have online access to their business's tax information through My Business Account at www.cra.gc.ca/mybusinessaccount. For a director to have online access, CRA's system must contain his or her social insurance number.
You can send a copy of official documentation showing the change of directors by fax or by mail to their tax services office.
Examples of acceptable documentation include official notification from the incorporating body, minutes of the Board of Directors' resolution approving the change, a certificate of incumbency with an impression of the corporate seal, among others. If CRA need additional information before updating our system, they will contact you.
You can find CRA's tax services office at www.cra.gc.ca/tso.
That you should notify the Canada Revenue Agency (CRA) when directors of your corporation change?
Avoid the possibility of service delays by ensuring that information on the incoming directors is added to our system and information on the outgoing directors is removed. Once the information has been updated, the new directors will be able to speak with CRA agents on the phone and submit written requests, such as Form RC59, Business Consent Form, on behalf of their corporation.
Directors can also have online access to their business's tax information through My Business Account at www.cra.gc.ca/mybusinessaccount. For a director to have online access, CRA's system must contain his or her social insurance number.
You can send a copy of official documentation showing the change of directors by fax or by mail to their tax services office.
Examples of acceptable documentation include official notification from the incorporating body, minutes of the Board of Directors' resolution approving the change, a certificate of incumbency with an impression of the corporate seal, among others. If CRA need additional information before updating our system, they will contact you.
You can find CRA's tax services office at www.cra.gc.ca/tso.
Monday, November 24, 2008
Shareholders' Meetings
The Canadian Business Corporation Act ("CBCA") states that a corporation "... must hold a shareholders' meeting on a date that is no later than 15 months after holding the last preceding annual meeting, but no later than six months after the end of its preceding financial year."
Alternatively, shareholders may pass a resolution in lieu of meeting. A resolution in lieu of a meeting may be useful for small corporations that have only one or a few shareholders. A resolution in lieu of meeting is a written resolution signed by all shareholders who would have been entitled to vote at the meeting that deals with all matters required to be dealt with at a shareholders' meeting. This resolution is just as valid as it would be if passed at a meeting of shareholders. This resolution should be retained in the corporation‘s records.
The shareholders' meeting (or resolution in lieu of a meeting) allows shareholders to obtain information about the corporation's business and to make appropriate decisions regarding this business. The date of the meeting, or of the resolution, must be indicated on your Annual Return.
Agenda
At minimum, the agenda of an annual meeting must include the following items:
- consideration of the financial statements;
- appointment of an auditor (or a resolution of all shareholders not to appoint an auditor); and
- election of directors.
Often, the agenda includes an additional item, "any other business." This portion of the meeting allows shareholders to raise any other issues of concern to them. If directors want shareholders to consider a matter, it should be listed in the agenda prior to the meeting and not raised as "any other business."
Calling a shareholders' meeting
The directors must notify voting shareholders of the time and place of a shareholders' meeting. They must do so no more than 60 days and no fewer than 21 days before the meeting date. For example, if the meeting is to be held on May 20, the notice of the meeting should be sent no earlier than March 22 and no later than April 30.
Unless otherwise provided by the by-laws or the articles, this notice can be sent electronically to shareholders if they have previously consented to receiving such notices electronically and if they have designated a system for receiving them.
Location of the shareholders' meeting
The annual meeting may be held in Canada at a place specified in the by-laws. Or, if the by-laws do not specify a location, directors may choose one. An annual meeting may be held outside Canada only in cases where the corporation's articles permit it or if all voting shareholders agree.
Also, where the corporation's by-laws permit it, the directors of a corporation may decide that a meeting of shareholders will be held entirely by means of a telephonic, electronic or other communication means that will permit all participants to communicate adequately with each other during the meeting. In such cases, it is the responsibility of the corporation to make these facilities available.
Unless otherwise provided by the by-laws, a corporation can allow shareholders to attend the meeting electronically. The communications system used must permit all participants to communicate adequately with each other during the meeting.
Other requirements of the shareholders' meeting
Quorum
Unless a quorum of shareholders is present or represented at annual or special shareholders' meetings, no business that is binding on the corporation can be conducted. A quorum is present at a meeting when the holders of a majority of the shares entitled to vote at the meeting are present in person or represented by proxy, regardless of the number of persons actually present at the meeting. Note, however, that a corporation's by-laws can provide for a different type of quorum.
Electronic voting
Unless the corporation's by-laws specifically forbid it, electronic voting is allowed, as long as it is possible to verify the vote without knowing how each shareholder voted.
Minutes of the meeting
The corporation must keep a written record of the meeting. This record usually includes such information as:
where and when the meeting was held;
who attended; and
the results of any voting.
For more information, please consult Industry Canada's website
Alternatively, shareholders may pass a resolution in lieu of meeting. A resolution in lieu of a meeting may be useful for small corporations that have only one or a few shareholders. A resolution in lieu of meeting is a written resolution signed by all shareholders who would have been entitled to vote at the meeting that deals with all matters required to be dealt with at a shareholders' meeting. This resolution is just as valid as it would be if passed at a meeting of shareholders. This resolution should be retained in the corporation‘s records.
The shareholders' meeting (or resolution in lieu of a meeting) allows shareholders to obtain information about the corporation's business and to make appropriate decisions regarding this business. The date of the meeting, or of the resolution, must be indicated on your Annual Return.
Agenda
At minimum, the agenda of an annual meeting must include the following items:
- consideration of the financial statements;
- appointment of an auditor (or a resolution of all shareholders not to appoint an auditor); and
- election of directors.
Often, the agenda includes an additional item, "any other business." This portion of the meeting allows shareholders to raise any other issues of concern to them. If directors want shareholders to consider a matter, it should be listed in the agenda prior to the meeting and not raised as "any other business."
Calling a shareholders' meeting
The directors must notify voting shareholders of the time and place of a shareholders' meeting. They must do so no more than 60 days and no fewer than 21 days before the meeting date. For example, if the meeting is to be held on May 20, the notice of the meeting should be sent no earlier than March 22 and no later than April 30.
Unless otherwise provided by the by-laws or the articles, this notice can be sent electronically to shareholders if they have previously consented to receiving such notices electronically and if they have designated a system for receiving them.
Location of the shareholders' meeting
The annual meeting may be held in Canada at a place specified in the by-laws. Or, if the by-laws do not specify a location, directors may choose one. An annual meeting may be held outside Canada only in cases where the corporation's articles permit it or if all voting shareholders agree.
Also, where the corporation's by-laws permit it, the directors of a corporation may decide that a meeting of shareholders will be held entirely by means of a telephonic, electronic or other communication means that will permit all participants to communicate adequately with each other during the meeting. In such cases, it is the responsibility of the corporation to make these facilities available.
Unless otherwise provided by the by-laws, a corporation can allow shareholders to attend the meeting electronically. The communications system used must permit all participants to communicate adequately with each other during the meeting.
Other requirements of the shareholders' meeting
Quorum
Unless a quorum of shareholders is present or represented at annual or special shareholders' meetings, no business that is binding on the corporation can be conducted. A quorum is present at a meeting when the holders of a majority of the shares entitled to vote at the meeting are present in person or represented by proxy, regardless of the number of persons actually present at the meeting. Note, however, that a corporation's by-laws can provide for a different type of quorum.
Electronic voting
Unless the corporation's by-laws specifically forbid it, electronic voting is allowed, as long as it is possible to verify the vote without knowing how each shareholder voted.
Minutes of the meeting
The corporation must keep a written record of the meeting. This record usually includes such information as:
where and when the meeting was held;
who attended; and
the results of any voting.
For more information, please consult Industry Canada's website
Did you know.... Tax Deductions for meals and/or entertainment
DID YOU KNOW....
As a business owner and/or independent contractor, the general rule for tax deductions related to meals and/or entertainment is that you may deduct up to 50 percent of the cost of meals and/or entertainment, or "an amount that is reasonable in the circumstances, whichever is less" (Business and Professional Income Guide, CRA).
As a business owner and/or independent contractor, the general rule for tax deductions related to meals and/or entertainment is that you may deduct up to 50 percent of the cost of meals and/or entertainment, or "an amount that is reasonable in the circumstances, whichever is less" (Business and Professional Income Guide, CRA).
Wednesday, November 19, 2008
Offer to Lease & Commercial Lease
I previously blogged about the importance of seeking legal advice before signing any offer to lease.... well, recently I got a call from a new client asking me if I could review his offer to lease. As usual, my first question was: Did you already sign the offer... the client said yes, the broker was pressuring me and I wanted to make sure that I got this deal!!! Unfortunaly, after reviewing the offer, a lot of important points were not covered and therefore; it is now too late for the client to ask for it. Once the offer to lease is signed, it is a binding contract. Please make sure that you are seeking legal advice BEFORE signing any agreements, I can assure you that may save a LOT of money in the long run. Again, I am dealing with a lot of brokers and the vast majority of them recommend to their clients to seek legal advice before signing any type of offer... but it appears that others do not recommend such advice. However, at the end of the client it is your responsability as a business person to ensure that you are protected.
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