Once you've incorporated your company - whether it's a federal corporation through Corporations Canada or a Quebec corporation - you will have to proceed with its initial organization. Today, we'll discuss what you need to do once you receive your certificate of incorporation.
Open a Business Bank Account
Since a corporation is a separate legal entity that owns assets (and carries liabilities), it’s important to have a separate designated corporate bank account. This account will be used to receive money for the business and pay out expenses. To open an account, most financial institutions will require the certificate of incorporation, the articles of incorporation, and some forms to be filled out.
Organize your Corporation
After incorporating, it’s important to take the time to organize its internal structure. This includes the following.
Create By-laws
The by-laws are a set of rules governing the internal operations of the corporation. Some of the rules that can be set in place by your by-laws include:
The date of the corporation’s financial year-end
Establishing the salaries and remuneration of directors and officers
Establish the quorum - i.e. the minimum number of directors and shareholders required at meetings to make binding decisions.
Under the Quebec Business Corporations’ Act, the directors make the by-laws and these are to be submitted to the shareholders for their approval.
Issue Shares
Shareholders are also known as the “owners” of the company. This ownership is established through the issuance, and purchase by the shareholders, of shares. The first set of shares is usually issued for a small amount of money which is deposited into the corporate bank account.
Appoint Directors
The shareholders are responsible for appointing the directors of a corporation. These directors will oversee the management of the business. In smaller companies, it’s commonplace to see one person playing the role of a shareholder, director, and officer.
Nominate Officers
Once the directors are elected, it’s their responsibility to nominate the officers of the company. These include positions like the President, Secretary, Treasurer, etc, and the officers oversee the day-to-day affairs of the business.
Create Registers
There are three main registers: the directors’ register, the officers’ register, and the securities register. The directors’ and officers’ register will include the name, address, and the beginning and end dates of the director mandates. The securities register will have the shares issued, the amount paid for them, information about shareholders, and a record of any transfers made throughout the life of the business.
Appoint an Accountant
Nominate the firm that will be used by the company for its accounting purposes.
Share Certificates
Share certificates are legal proof of share ownership. Each share certificate will show the name of the shareholder and the number and class of shares held by them.
Shareholders’ Agreement
If there is more than one shareholder in the company, we strongly recommend implementing a shareholders’ agreement. This agreement will provide a roadmap of the relationship between the shareholders and the corporations and amongst the shareholders.
Register for the GST/QST Tax Numbers
Determine whether you need to register for the GST/QST. Generally, businesses only need to register and charge their clients sales tax once they hit the $30,000 gross income threshold. However, it may be beneficial to register early so that you don’t have to worry about hitting the threshold. Additionally, registering from the beginning allows you to accumulate tax credits for the business expenses incurred on which you pay GST/QST.
Apply for the Necessary Business Licenses
Last but not least, is to apply for the necessary business licenses - especially before you sign a commercial lease. These licenses will ensure that you are authorized to provide the products or services to your customers, including the necessary certificate of occupancy.