NEXT STEPS AFTER INCORPORATION

Now that you have incorporated your business, what's next?

1. Open A Business Account

Your business is now incorporated and you are all set. Your corporation is a distinct legal entity, separate and apart from you. It can sue and be sued, it can own assets, transact business and therefore needs a bank account, separate from your account. To open your corporate bank account, banks may request the corporation’s certificate and articles of incorporation.

2. Organize Your Corporation

Organizing your corporation means putting structure to it and assigning responsibilities within the corporation. After incorporation, the incorporators or first directors need to call a meeting of directors to organize the corporation or in place of a meeting, they could sign organizing resolutions approving and adopting the corporate structure agreed to it. At the meeting of directors or through corporate resolutions, the corporation will:

Issue shares from the authorized share capital of the corporation

A corporation may start with the incorporator being the sole shareholder. As legal proof of share ownership, the corporation will create and issue share certificates for each of the shareholders of the corporation. Share certificates show the class and number of shares held by shareholders. If you have more than one shareholder within the corporation, it is advisable to prepare a Shareholders Agreement.

Appoint Officers and Directors

The shareholders appoint directors to oversee the activities of the corporation. Again, the sole shareholder may be appointed as the sole director. The directors of your corporation appoint the officers – President, Secretary, and Treasurer.

Create Registers and Ledgers

Post incorporation, you should create a shareholders' register, directors' register, officers' register, shareholders' ledger and a register of individuals with significant control (ISC) over the corporation.

Minute Book

Keep all corporate records in a minute book. You will keep records of corporate documents such as your corporation’s:

• Certificate of Incorporation

• Articles of Incorporation

• Initial returns

• General Corporate Bylaws

• Banking Bylaws

• Minutes of company meetings, agreements and resolutions

• Copies of initial returns and forms filed with the Ministry

• Ledgers and Registers

• Share Certificates

You should keep your minute book and corporate records up-to-date and well-organized in compliance with the Law.

3. File Your Initial Returns

The law requires each corporation to file initial returns within 60 days of incorporation. This filing is mandatory for your business to be compliant with the provisions of the Ontario Business Corporations Act (OBCA) .

4. Plan Your Business Expenses

After opening a business account post-incorporation, you can make cheques payable to your corporation. Funds generated after incorporation can be deposited directly into your corporate bank account. Payments for business expenses should be made through the corporate bank account, and business expenses paid by cash should be tracked and reimbursed by the corporation.

You can also plan salaries, dividends and how to split income within the corporation. Post incorporation, the former sole proprietor who personally operated the business becomes an employee of the corporation and would start receiving reimbursement from the corporation for the services provided. If the corporation makes a profit, the shareholders of the corporation may be paid dividends. The corporation may also pay salaries to family members including parents, spouses or children.

Key Takeaways

Your corporation becomes a legal entity after incorporation, separate from you and should own its own corporate bank account. The first directors are required to have a meeting where they organize the corporation and assign responsibilities. The corporation is required to maintain updated corporate records in a corporate minute book, file annual returns and prepare annual resolutions. The corporation may pay dividends to its shareholders when profit is made.

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Written by Jumi Odepe, Principal Lawyer, Jode Law

If you have questions about incorporating your business, reach out to the business lawyers at Jode Law via email at lawyers@jodelaw.ca

The articles published by Jode Law are intended as general information only and do not serve as legal advice. By reading, the reader understands there is no solicitor-client relationship established. If you have a legal question, consult a lawyer.