Incorporating: Do You Need A Lawyer’s Help?
Technology and the internet have transformed the legal industry, and now it’s easier than ever to take the DIY route for important legal steps like incorporation. And this is what many people do to keep their start-up costs down.
But should you?
As an attorney, I might be a bit biased, but as an entrepreneur, I look at the question with solid business sense. Let me tell you what I mean.
I once worked with a corporation that had a fantastic and fast-growing business. Much to their excitement, they received a strong offer from an investor. They were poised to get an injection of cash and take things to the next level, but soon there was a problem. When they incorporated, they did not provide the proper share description. In other words, the entrepreneurs did not want to give the investor the only available share class (Class A shares with voting rights). The problem was that the investor expected to receive that class of shares since that was the only share class authorized by the corporation from the beginning. The result was delays from the investor, and he eventually pulled out, telling the directors of the corporation that they were unorganized.
Providing the proper share description is one of the technical intricacies of incorporating. It’s very easy to overlook, but needs to be done right.
I often joke that many of my best clients are companies who incorporated on their own and made a few mistakes, meaning that the corporation wasn’t set up in a way that allowed them to do what they wanted in later years of business growth. My team and I are hired to fix things and get the corporation back on track, redesigning the corporate set up and organizing things so that the options the directors and shareholders want are available to them. We’ll do this, but we much prefer saving a new corporation from troubles like this right from the start. In this case, if they had invested a little more in setting things up right at the beginning, it would have saved them time and money down the road. Just a short consultation could have ensured all was done properly, and they likely would have onboarded the investor they were so hoping to win over.
In an earlier article, we reviewed the 6 most common incorporation errors. It’s those errors that people often make when going the DIY route, and need to later hire an attorney to fix.
In addition, when incorporating, you’ve go to make important decision regarding each of the following, and ensure each choice is right for your corporation:
- Incorporate in the right jurisdiction (provincial or federal).
- Name the corporation (ensuring no one else owns the rights to that name by performing a preliminary trademark search).
- Properly define your share description.
- Properly define the corporation’s activities.
- Complete and organiser your corporate minute book.
This is the way I look at incorporation:
When you incorporate, you do so to set your business on solid legal footing and protect your interests and assets. Incorporation creates a separate business entity and offers you the benefit of limited liability to protect your personal assets and help secure your corporation’s future. Why would you take any risks with that?
Usually there’s only one reason: money. So let me give you some tips on how to incorporate right, without breaking the bank.
3 Ways to Incorporate Right on a Budget
1. DIY and Attorney Review
If you’d like to prepare your incorporation, get the forms completed and then have them reviewed by an attorney who understands your business and objectives. Incorporating does require a process of complicated agreements, so the advice of an attorney can be invaluable during the procedure. The attorney will be able to check over your documents, make sure the right decisions are being made and make recommendations and suggestions to help you get started on the right legal footing. Once it’s reviewed and approved, you can then submit to Corporations Canada or your provincial registry.
An attorney can also offer assistance, suggestions and advice to help you raise capital from outside investors and lenders as well as address relevant tax and legal issues pertaining to the jurisdiction in which the business is incorporated and operated, or often make the proper connections for you such as to a banker, investor or accountant.
2. Online Incorporation
There are plenty of options from legal firms and start-ups offering online incorporation packages. Because of the frequency with which I meet entrepreneurs who need help fixing up the corporation, we launched our No-Fee Incorporation service at Legal Logik. Just sign up online, fill out our simple-to-follow form, and cover the required government fees. Our corporate team will complete your incorporation, ensuring its done correctly, and tailored to your business’ needs and objectives to prevent surprises in the future. You will also enjoy excellent customer service, and all without paying any legal fees for your incorporation.
As entrepreneurs ourselves, we know exactly what it’s like to be starting a business and this is our way of helping other entrepreneurs like ourselves launch and set the stage for their future success. As a company, our mission is to be instrumental in helping Canadians make their entrepreneurial dreams a reality. We want to help them when their idea is just a dream and be there beside them when that dream has become a reality. There’s nothing we love more.
3. Packaged Deal
More and more law firms are offering packaged deals, whereby, through a bundle you get a much better price on the legal services you need to start up. Since new businesses often need many of the same services, such as incorporation, contracts, a preliminary trademark search, and several hours of consultation, we launched our Start-Up Kit. It’s got everything you need to launch on solid legal footing, offers you 10% on any additional corporate legal services for 12 months, and costs half of what you might normally pay each of the service included if you were to purchase them on their own. Look out for offers like that or check out ours at www.legallogik.com/incorporation