Business Law Tools - Before You Incorporate
The information provided in this brochure is of a general nature and is not intended to be taken as the giving of an opinion by the law firm of Murphy Collette Murphy or any of its members. Specific advice should be sought on particular situations from your lawyer. © 1994, 1995, 1996 Henry J. Murphy
We have prepared this brochure in the hope that a little better understanding of what is involved in incorporating a business will assist you in avoiding the pitfalls. It is not meant to be exhaustive but rather just a tool to supplement what you will get out of the candid discussions that will evolve between you and the lawyer representing you here at our firm.Set a Budget
The incorporation process can quickly eat in to your wallet therefore budget for not only filing fees and legal fees but for such other incidentals as business licenses, start-up supplies like business cheques, letterhead, invoices, etc.Speak with a lawyer
Whether you need to actually hire a lawyer will depend upon the complexity of your business. Some one director corporations can be incorporated by yourself with forms available through the Province of New Brunswick Director of Corporations. Other incorporations, where for instance there are several shareholders and buy-sell agreements required, should be discussed with your lawyer.
The final property settlement may be set up so that one spouse does not actually make payments on the marital debts, however, that person's share of debt is still accounted for in the division of marital property between the spouses.Buy-sell Agreement
A buy-sell agreement is essentially a contract between the principals of the company that provides that if a shareholder or his heirs wants to sell shares certain procedures have to be followed. It will specify who must buy the shares and at what price. This can be more complicated than you might think at first glance and if it is neglected you may find it difficult to arrive at an agreement later.Get tax numbers
Before you can open bank accounts or hire employees you should know what the registration requirements are for the Goods and Services Tax, Provincial Sales Tax, Income Tax employee deductions, Workers' Compensation, and local municipal by-laws.Separate Accounts
Avoid the temptation to continue to use your regular bank account with your accounting software. If the new corporation does not keep separate financial records you risk having the income tax department not recognizing the corporate veil.Pro forma Financial Statements
Finally, and perhaps most importantly, prepare pro forma financial statements to assist you in calculating your after tax income position after the incorporation. You might just find that you are treated more harshly by the Receiver General than you are now.
© 1996, 2001, 2007 Henry J. Murphy
Murphy Collette Murphy
Barristers & Solicitors
250 Lutz Street
Moncton, New Brunswick, Canada