How to Incorporate a Business

When starting a new business or non-profit organization, it is important to set up the legal structure correctly. There are several ways to make this happen, as well as an explanation about what it means for a business or non-profit to be a corporation.

 

Alberta Corporations 

What is a corporation? A corporation is an independent legal entity that exists separate and apart from its owners (shareholders). The corporation essentially acts as a “person”. 

A corporation can:  

  • buy, sell and own assets, including land   
  • make contracts   
  • sue  and be sued 

Contrary to popular belief, a business does not have to be large to register as a corporation. In fact, a small business with only one owner can register under this category. 

If a business owner requires assistance in deciding if a corporation is the best form of business. It is highly recommended that they seek professional legal advice. 

 

Out-of-province Corporations 

If a business owner’s corporation was formed in another province or country, it must be registered to do business in Alberta.  

Registering a corporation in Alberta removes the need to have separate corporations in every place an owner’s corporation conducts business.  

A corporation is considered to be doing business in Alberta if: 

  • it solicits business in Alberta   
  • its name, or any name under which it conducts business, is listed in an Alberta telephone directory or appears in any advertisement with an Alberta address   
  • it has a resident agent, representative, warehouse, office or place of business in Alberta   
  • it’s licensed or registered, or required to be licensed or registered, under any Act of Alberta allowing it to conduct business   
  • it owns land in Alberta  

 

Non-profit Companies 

Organizations can choose to incorporate a non-profit company when they want a legal structure that is similar to the structure of a for-profit corporation.  

There are two types of non-profit organizations: private and public.  

An individual or group running a non-profit should seek professional legal advice if they need help deciding in which type of company is best for the needs of their group or if a society is a better legal structure. 

Below is a break-down of what it means to be a private non-profit, a public company and a cooperative. 

Private Non-Profits 

At least two people are needed to form a private non-profit organization, which operates under the following restrictions:  

  • it can’t have more than 50 shareholders or members   
  • it can’t sell shares or memberships to the public   
  • it restricts or forbids share or membership transfers  

Public Companies 

At least three people are needed to form a public company. A public non-profit organization doesn’t have the restrictions of a private organization.  

Cooperatives 

A cooperative is a business organization started by people who want to:   

  • use services or buy goods as a group   
  • have an equal say in how the business is run   
  • share in any profits the business makes   

Alberta-based cooperatives must be incorporated and out-of-province cooperatives wanting to do business in Alberta must be registered under the  Cooperatives Act.   

For expert legal advice regarding organizations, business and corporations, contact KGPC LLP today.  

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