We often see people being tempted by online ads and incorporation retailers promising a quick and easy incorporation for a few hundred dollars. Almost all of these people end up regretting this decision.
Why should you pay a business lawyer to incorporate when these online services charge a fraction of the cost?
The answer is: you are not getting what you think you are paying for. You may thinkyou are receiving a complete incorporation, but these services only complete the first step of the incorporation process. This is the easiest step, the least amount of work, and the least important in our opinion.
In this guide, we will explain why you should hire a lawyer to incorporate a business in Canada. We will also compare what you receive from these online services versus what you would receive from our firm.
Most online services only complete the first step in the incorporation process, which is filing the Articles of Incorporation. This is about 10% of the incorporation process.
Creating and maintaining a Minute Book is crucial and legally required. It makes up the other 90% of the incorporation process. But most online services overlook this part, leaving you with an incomplete and vulnerable corporation.
Business Lawyers handle both filing the Articles of Incorporation and organizing the company, ensuring a legally valid corporation.
In addition, business lawyers provide essential advice on the best corporate structure, minimizing taxes, and avoiding legal pitfalls.
Our services include tailored business advice, industry-specific requirements, and necessary legal documents that online services often miss.
Proper incorporation by a business lawyer helps avoid risks like losing limited liability protection, company dissolution, and legal issues with property and ownership.
Hiring a business lawyer may seem more expensive initially, but it saves time, money, and potential legal problems in the long run.
Working with us means having a trusted business advisor in your corner, something online services can’t offer. They aren’t even run by lawyers in the first place!
So, you’ve decided to incorporate your business in Canada. Perhaps, you’ve spoken to your accountant or done your own research and decided that you want to enjoy the benefits of incorporation. (If you haven’t, we recommend you check out our article “Should I Incorporate a Business in Canada?“)
At this point, you may be unsure whether to hire a lawyer to incorporate or use an online service provider that is advertising cheap and easy incorporations.
Unfortunately, these service providers are misleading and do not educate clients on the proper incorporation procedure – from initial name approval request to post incorporation documents. So, let’s briefly look at the two major steps involved.
Incorporation has many smaller steps, but it is easiest to think about them as two main steps:
Wondering if incorporation is right for you? Let us guide you.
Step 1: Prepare Articles of Incorporation and File with the Ministry
The Articles of Incorporation is a legal document that registers the Corporation in the government’s system. The Articles outlines the following key information:
Corporation Name
Location of registered and records offices
Name of all Directors of the Corporation
Contact Information of Directors
Share structure and Allowable Share Classes
Purpose of Corporation (i.e. nature of business)
Incorporator(s)’ information
Any restrictions on the transfer of shares, if applicable.
Once you complete your incorporation application, you’ll receive a certificate of incorporation. This certificate confirms your corporation is registered in the government’s database, but it doesn’t guarantee legal existence.
Unfortunately, most online incorporation services stop here. They charge you, give you a certificate and basic documents, and make you think your incorporation is complete. This is not true. Your corporation still needs the following step to be complete.
Step 2: Create the Corporate Minute Book
Creating a Corporate Minute Book, as required by the business corporations act, is a critical part of the incorporation process, making up about 90% of the work. Unfortunately, many discount online services fail to inform you of this step. As a result, many entrepreneurs are left frustrated, discovering too late that their incorporation is incomplete. This is why hiring a lawyer to incorporate your business in Canada is essential.
A Minute Book serves as your corporation’s official record of legal and regulatory activities, maintained at the records office. Keeping it up to date isn’t just good practice—it’s the law. By hiring a lawyer, you ensure that all necessary steps are properly handled, giving you peace of mind and protecting your business from future legal issues.
A lawyer will draft detailed documents, including the incorporation agreement and central securities records, and have them signed by the shareholders to:
Issue shares to the shareholders that outline the percentage of ownership and rights
Appoint the directors and officers
draft the shareholder and director resolutions
Confirm the corporation’s bank, accountant, and lawyer
Prepare the annual report requirements
Issue the corporate by-laws
Exempt the directors from preparing audited financials
indemnify the directors and officers from liability
Technically, there is no legal requirement to hire a lawyer to incorporate. However, unless you understand corporate law well, incorporating yourself properly can be very difficult and expose you to legal, business, and tax risk. So, practically speaking, most people need a lawyer to incorporate properly.
Let’s look at why using an online service provider is a bad idea.
If you bought a book that was 90% off, but 90% of the pages were missing, would that be a good deal? What about if you got a 90% discount on a haircut, but the barber only cut 10% of your head? Of course not!
Everyone wants a great deal, but you need to compare similar services! Or as the saying goes, “you must compare apples to apples.”
In the case of online incorporation services, you are paying about 10% of the normal cost for 10% of the final product! Why 10%? Well, because these companies only do about 10% of the work that is actually involved in properly incorporating a business in Canada.
They merely complete Step 1 above, which involves filing the Articles of Incorporation on a government website—a task you can easily do yourself.
The worst part is that you think you’re getting a complete incorporation, but you’re only 10% the way there! The other 90% of an incorporation is in Step 2 and requires a lawyer to complete properly.
The most important part of Step 2 is issuing shares to shareholders and the ability to create classes of shares. These are the ownership interests in the company. Another important part is creating the organizational resolutions, which include directors appointing officers, shareholders approving bylaws, appointing the law firm and accountant, setting out the financial year end, etc. The corporation also requires bylaws, which set out the legal management of the company. Various registers and ledgers are required. The list goes on!
Unfortunately, these online services provide no guidance or even inform their customers about Step 2. As a result, their customers wrongly believe that they have a complete incorporation when they do not.
When you incorporate a business in Canada with an online company and Step 2 is not complete, you will encounter the following issues:
You don’t have a legally valid corporation in Canada
Because your corporation does not meet business corporations act requirements, you risk losing limited liability protection– this is one of the main reasons to incorporate!
Your corporation may be removed from the registry by the Ministry and dissolved
If you own real estate in the corporation, and the corporation is dissolved, the property “escheats” to the Crown – meaning the property transfers to the government
Your corporation can’t be sold, since it was not properly organized
You will have trouble doing any type of income splitting, since the corporation does not have shares
You will have trouble defining the roles and ownership of partners because there are no shares or bylaws
If you try to complete Step 2 years after incorporating, it will cost you much more. Unfortunately, many of the incorporations we do at DiMinno Rizzi Lawyers are rectifying business corporations that were improperly incorporated online. Better to start your business the right way.
Trying to incorporate a business in Canada with an online incorporation service leaves you vulnerable. In every sense of the word, you don’t have a corporation.
Is it Worth Incorporating a Business in Canada by Yourself?
We sometimes get asked, “if I am paying an online service provider to do something I can do myself (Step 1), why can’t I just handle business incorporating by myself?” The answer is, you could, but you still won’t have a complete incorporation.
As mentioned above, Step 2 involves many further steps that have legal, business and tax consequences. Without proper legal and financial expertise, entrepreneurs often inadvertently expose themselves to significant risks, tax issues, and administrative burdens, potentially leading to financial setbacks and legal complications.
That’s why, in our experience, it is imperative that you speak to a business lawyer prior to incorporating a business in Canada. At DiMinno Rizzi Lawyers, we usually have a free one-on-one strategy session to assess whether incorporation is right for you in the first place.
Why Use a Lawyer to Incorporate in Canada?
“When you incorporate with us, you gain a trusted advisor in your corner to navigate the minefield that is business. You won’t get that from a clerk-run, online incorporation factory that spits out government filings disguised as incorporations.”
– Antonio DiMinno, Business Lawyer
If getting the job done right isn’t enough reason for you, there are other big reasons you should hire a lawyer when you incorporate a business in Canada. Unlike existing companies that might have made incorporation mistakes, you can start off right.
When you hire a lawyer to incorporate in Canada, you will also receive advice from someone with specialized legal and business knowledge. One of the first questions your lawyer will consider is whether a corporation is even the right entity for you. You may be better off with a limited partnership, general partnership, co-operative, trust, or a sole proprietorship. At DiMinno Rizzi Lawyers, we usually answer this question on our free introductory call.
If one of our business lawyers determines that a corporation is a good fit for you, we will prepare documents required and you will also get:
Advice on the most suitable corporate structure for your legal and business needs
Advice on the best business structure to minimize taxes (usually in partnership with your accountant)
Strategic, personalized business advice for your industry and future growth
Strategic and personalized legal advice on avoiding legal traps and pitfalls in your specific industry
Any potential additional legal requirements for your specific business and industry. For example, if your business is in finance, food/beverage, or construction, additional regulatory requirements may be necessary. Failing to follow these can cost you big time, and sometimes even attract criminal charges
Any business agreements that you should have, such as services, distribution, employment and independent contractor agreements. Our business lawyers offer deep discounts and bundle pricing on these contracts when you incorporate with us.
Where there are multiple business owners/partners, advice on whether you should consider a shareholders’ agreement
Advice on preventing any lawsuits or disputes before they happen
Advice on how to deal with employees and independent contractors
Referrals to other vetted professionals in our network who can save you money and even help you earn more money! Think consultants, investors, lenders, coaches/mentors, accountants, bookkeepers, brokers, subcontractors, and marketing experts.
This is all invaluable knowledge that will save you tens of thousands of dollars in legal fees down the road. When you incorporate with us, you don’t just know that it was done right, but you also gain a trusted advisor in your corner to handle legal matters and navigate the minefield that is business. You won’t get that from a clerk-run, online incorporation factory that spits out government filings disguised as incorporations.
Here is a breakdown comparison of what you get with a online incorporation services company compared to our firm:
What You Get
DiMinno Rizzi Lawyers
Online Incorporation Service
STEP 1 – Preparation and Filing of Articles of Incorporation(see above)
✔
✔
Payment of Government Fee for Filing of Articles
✔
✔
STEP 2: Preparation of Corporate Minute Book and Organizational Documents, including:
✔
✘
Share Issuance and Share Certificates
✔
✘
Appointment of Directors and Officers
✔
✘
Corporate Bylaws Creation
✔
✘
Director and Officer Liability Indemnification
✔
✘
Bank, Accountant, and Lawyer Confirmation
✔
✘
Shareholder, Director, Officer, and Transfer Registers/Ledgers
✔
✘
Legal Advice on Entity Structuring (i.e. whether a corporation is best vs. other legal structures)
✔
✘
Specific Legal Advice for Your Industry
✔
✘
Strategic Business Advice for Your Industry
✔
✘
Legal Tax Minimization Strategies
✔
✘
Access to Legal Services at Deep Discounts & Bundle Pricing
✔
✘
Access to Our Rolodex of Vetted Professionals, Investors, and Founders
✔
✘
How to Avoid Legal Traps and Pitfalls
✔
✘
Start-Up Growth & Exit Planning
✔
✘
Advice for Raising Capital & Getting Your Business Ready for Venture Capital Funding
In our experience, we can usually create your corporation in about a week, depending on factors like the number of share classes and the organizational structure of the business. For Federal incorporations, the process normally takes a few days longer due to the name approval request to ensure your new company name isn’t already taken. It is also slightly longer to incorporate a Named corporation versus a numbered corporation.
Disclaimer: All number figures are approximate only and may be subject to change. Like all material on this website, this is not financial, legal, or tax advice. Contact a professional for your specific situation.
About the Author Email: antonio@drlawyers.ca Phone: (647)-205-9128
Antonio DiMinno isa business & real estate lawyer, entrepreneur, and founder of the law firm, DiMinno Rizzi Lawyers. Antonio takes pride in working differently than most law firms. He doesn’t see himself as just a lawyer, but rather a trusted business and legal advisor in your corner. His focus is helping entrepreneurs and real estate investors through practical, business-savvy, and cost-effective solutions delivered in plain English.
Disclaimer: All number figures are approximate only and may be subject to change. Like all material on this website, this is not financial, legal, or tax advice. Contact a professional for your specific situation.
About the Author Email: antonio@drlawyers.ca Phone: (647)-205-9128
Antonio DiMinno isa business & real estate lawyer, entrepreneur, and founder of the law firm, DiMinno Rizzi Lawyers. Antonio takes pride in working differently than most law firms. He doesn’t see himself as just a lawyer, but rather a trusted business and legal advisor in your corner. His focus is helping entrepreneurs and real estate investors through practical, business-savvy, and cost-effective solutions delivered in plain English.
