Many corporations are solely owned and managed by one individual, or a close-knit group of a few people. When this is the case, those individuals sometimes have questions about the requirements of a corporation, and if those requirements are still necessary when it’s just them. Below we have listed ten common questions from business owners that run their business solo—or have a very small team of individuals behind the business. This article is meant to give a general overview of some common questions, but please ensure that you speak to a professional about the needs of your unique situation.
If it’s just me involved in the corporation, do I still need to create and keep a Minute Book up-to-date?
The short answer is yes. Minute Books are required, regardless of the size of your corporation. As we talk about a lot—your Minute Book does not have to be a paper Minute Book—it can be in digital form, which we find much more convenient and efficient. Read our articles about Minute Books linked below. The Tobuso Platform is meant for small business owners who want to keep their records organized and up-to-date—secure and easily accessible from anywhere.
- All About Corporate Minute Books
- Digital Minute Books: How They Work, Why They’re Important, and What They Can Do for Your Small Law Firm
How do I have an annual Shareholders meeting when I’m the only shareholder?
Luckily, you don’t have to book a boardroom and sit in there on your own to discuss corporate matters with… yourself. Most small corporations will pass written resolutions in lieu of a meeting. Written resolutions are a way for you to ensure that all matters that need to be discussed annually (or as they come up) are taken care of and recorded properly—and the appropriate resolution(s) are passed to show this, rather than meeting minutes.
Should I pay myself as an employee or as a lump sum annually?
This is a great (and very important) question. These questions should be answered by an accountant. If you’ve read some of our other articles, you know that we highly recommend that corporations work with an accountant to ensure that they remain compliant with the CRA. The Accountant can also give advice on the best approach to receive personal income from the Corporation, as every situation is unique.
Isn’t an Annual Return the same thing as a tax return?
No. A corporate annual return (also sometimes called a corporate information return or Annual Report) is entirely separate from a CRA tax return. It’s important to understand this, as failure to file your annual return could result in the involuntary dissolution of your corporation! Read our article “Corporate Information Returns VS. Tax Returns” to learn more.
Can I hold more than one officer position?
Yes! One individual can hold multiple officer positions. For example, one individual could be the President, Secretary and CEO of a corporation, and so on. The officers of a corporation are appointed by the directors, so this decision must be made by the directors. If you are the sole director, then you can appoint yourself to whatever position you choose—just be sure to keep a written record of this appointment (a Directors’ Resolution), which should be kept in the Minute Book. It is quite common for the same person or few people to be the shareholders, directors, and officers of the corporation. Check out the below articles to learn more about officers of a corporation:
- 3 Steps to Take When Appointing a New Officer of an Ontario Corporation
- Officers of a Corporation and the Steps to Add One
Do I hold any liability when it’s my corporation?
Yes. If you are acting as a Director and/or Officer of a corporation, then you can incur some personal liabilities. It is recommended that the corporation investigate purchasing director and officer liability insurance to cover off some of the associated risks, as well as implementing best practices to avoid incurring such liability. Speak to an insurance specialist to learn more and find an insurance policy that suits your corporation’s needs.
We are a close knit group of shareholders—should we still enter into a Shareholders’ Agreement?
It is definitely a good idea that consideration be given to entering into a Unanimous Shareholder Agreement amongst the Corporation and each of its shareholders. The Unanimous Shareholder Agreement can be used to address potential issues in the life of the corporation—such as what happens with a non-performing shareholder, and what happens when a shareholder wants to exit the corporation—that are not addressed, or not adequately addressed, in other documents governing the corporation. As every corporation is unique, we recommend that you work with a lawyer on this. Feel free to contact us for a referral to a lawyer.
Do I need to get a Business License for my Corporation?
You might! You can learn more about required permits and licenses at the BizPal site.
Other helpful resources include:
We incorporated under a numbered name because we couldn’t think of a name, but now we know what we want to operate as. What are our options?
This is a very common question. The other question that comes up is if you can operate under a different name than your corporation name. In Ontario, if a corporation wants to operate under a different name than their legal name, they can register a Business Name for the corporation. This is a great option as you still keep your legal corporate name, but you can advertise, etc. under the registered business name. For example, a company is called 1234567 Ontario Inc., but they want to do business as Jojo’s Flowers; they’ll need to first register “Jojo’s Flowers” as a business name for their corporation, and then they can operate under that name. You’ll first want to do some research to ensure that there are no existing businesses with the same or a similar name. There are other rules to this as well, for example, you still need to put your corporation’s legal name on all invoices, contracts, etc.. This could look like “1234567 Ontario Inc. DBA (“Doing Business As”) Jojo’s Flowers”.
Business names are valid for five years in Ontario before you need to renew them. It’s important to note that there is not much name protection with registered business names. If this is a concern to you, then you may want to legally switch the corporation’s name, which is a more involved process, but still possible. Trademarking is the most effective way to have name protection. Check out our article that’s all about naming your corporation here.
I want to form my own corporation but I don’t have an office space or address. Can I use my home address?
Yes, you can use your home address for your corporation. It’s important to note that the address of a corporation is public information, so this would mean that your home address will be available to the public. If this is a concern to you, you can rent a virtual office space or office address for a fee. There are other restrictions as well. For example, the address can not be a PO Box—it must be a physical address. We have a whole article about this, which you can read here.
We hope this article helped to answer some of your questions! Feel free to contact us if you have any questions or want to learn more about the platform for your corporate record keeping. Best of luck with your business endeavours!
