You are an entrepreneur who wishes to start a business in Quebec, the Canadian “belle province”, but are a bit puzzled about the steps that must be taken to do so.
Firstly, you must choose the legal form of company that best suits your needs. There are several legal models, such as the sole proprietorship, the general partnership, the limited partnership, the joint venture, the non-profit legal person, and the business corporation.
This article will focus on two popular legal forms, the sole proprietorship, and the business corporation.
If you need further information about taking your business to the province of Quebec in Canada, do not hesitate to call upon the services of the Law Office of S. Grynwajc. Stephan Grynwajc has a cross-border legal focus, speaks French and he is admitted as a lawyer in Quebec.
Sole proprietorship in Quebec: the simplest business structure
A sole proprietorship is the simplest form of business structure. It is often preferred by self-employed workers, small companies and by people operating a business on their own. The constituent of the company will be the sole proprietor and decision maker and he will be held personally liable for the company’s debts. In the event of a company’s bankruptcy, the individual risks personal loss.
Nonetheless, a great advantage of this model of enterprise is its simplicity. Registration in Quebec is only required if the business’s name does not include the surname and given name of the person operating it. Therefore, in most cases, you will not have to go through all the formalities and fees that come with the registration process.
Concerning taxes and the income tax return, the process is straightforward when it comes to a sole proprietorship, since the business’s income is declared through the proprietor’s personal tax return form. A certain amount can also be recognized as operating expenses by the latter, allowing the owner to reduce the personal income tax that they owe. However, if the company’s income is more consequent, it might be interesting to consider other legal forms such as the Business corporation.
The entrepreneur who first chooses the sole proprietorship can always decide, for instance, to turn their business in a joint stock company, or business corporation, which is one of the most popular enterprise models.
Business corporation in Quebec : the most popular company structure
The business corporation, also simply called “corporation”, is a legal entity and is distinct from its members. The company will therefore generally only bind itself through its actions and decisions, which is an interesting characteristic in the business world.
This type of enterprise has advantages such as the possibility to allocate power among different directors, the possibility to distribute the income to the shareholders in a flexible way and, of course, the limited liability of shareholders.
However, the costs associated with the creation of a business corporation in Quebec may be higher than for other types of enterprises and the management rules, more complex. Also, the business corporation is constituted with state intervention, and every change requires such an intervention as well, with associated costs.
How to register a business corporation in Quebec?
In Quebec, a business corporation can be constituted under the federal jurisdiction through the Canada Business Corporations Act (CBCA), or under the Quebec provincial jurisdiction through the Quebec Business Corporations Act (QBCA). The constitution formalities under these two laws are similar.
The first step is to choose the company’s corporate name, which can be either a corporate name or a designated number. If you choose the latter option, the designated number will be allocated by the Quebec Corporate Registry, the enterprise register of the province, or by the Director of Corporations, the federal registry. It is to be noted that, in Quebec, companies’ corporate name must be compliant with the Charter of the French language and must therefore be in French.
The corporation will still be able to identify itself in a language other than French outside of Quebec.
The second step is the constitution and registration of the corporation. Registering takes place after the necessary documents are transmitted to the provincial or federal registry. The registry will issue a certificate of incorporation and the corporation will come into existence on the date (and time if constituted under the Quebec Business Corporation Act) shown in the certificate.
The corporation incorporated under the Quebec Business Corporation Act will automatically be registered by the Quebec Corporate Registry upon the deposit of its articles of constitution, whereas its federal counterpart will have the obligation to file the registration declaration and pay the prescribed fees in the following 60 days.
The registrant will afterwards have to file an annual updating declaration and an updating declaration (when required) under the Act respecting the legal publicity.
Voilà, once the corporation is fully incorporated and registered, you may embark on your business adventure in Quebec !
If you’re looking to take your business to the province of Quebec in Canada, the Law Office of S. Grynwajc, PLLC has the services you are looking for. Stephan Grynwajc is admitted in Quebec and understands all of their local requirements. He also speaks French! For help with any American/Canadian issues, even in other Canadian provinces, contact the Law Office of S. Grynwajc, PLLC today!
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This article was written in collaboration with Irina Gueorguiev