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.
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.
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
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.
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
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.
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.