Lawyers and accountants can help individuals and family or other small corporations set up their businesses. Discussions with advisor’s can help individuals recognize possible issues not previously considered, and ways to handle future disputes, solutions for which can be set out in agreements. Tax issues can be considered. Provisions can be made for death or death or disability, future expansion to include other family members, and transitions to the next generation. The old adage “Good fences make good neighbours” is very apt in today’s business world and helps avoid problems within families.
TYPES OF BUSINESSES
PROPRIETORSHIP
-A business carried on by an individual in his own name or under a different name that could be registered with the Province. The income and expenses of the business are just included as part of that individuals income for tax purposes.
PARTNERSHIP
-Two or more persons engaging in a business enterprise. There should be an agreement drafted that says how the business is operated, how costs and income are shared, how decisions are made, how to dissolve the partnership and other terms. A partner is liable for the acts, representations and partnership debts incurred by the other partner in the name of a partnership. An agreement may address these issues. The share of net income received by each partner is reported on his or her personal income tax.
CORPORATION
-The Creation of a legal entity by virtue of statute. A corporation may own assets, sue and be sued and make contracts in its own name. It exists as a separate entity from its owners. The shareholders owns shares in the company and elect Directors who run the company. The corporation files its own tax returns and needs to maintain status at corporate registry by filing annual returns. Care should be taken when incorporating to have it set up correctly, both the filing at corporate registry and creation of the minute book. This is especially important when more than one person is involved in the corporation.as we take ourselves, sometimes we wish we had let a professional do it in the first place.
If more than one individual is setting up a corporation the shareholders should enter in to a SHAREHOLDER’S AGREEMENT. This is to protect minority shareholders. It can restrict some powers of directors, provide for withdrawal of one party, deal with death or disability, specify terms for future issuance of shares and admissions of new shareholders and many set out many other provisions . Some of the items addressed in this type of agreement are similar to the issues dealt with in partnership agreements.
JOINT VENTURE
An agreement between two or more individuals or corporations for a specific purpose. It is created by an agreement setting out the terms. It differs from a partnership in that its members retain separate identities and are just pooling resources and talents for the project involved. Accountants and lawyers are needed to properly set these out.
FARMS
Farming operations are commonly carried out as proprietorships, partnerships, or corporations. There are a variety of ways these are set up and different combinations of assets held individually or rolled into corporate entities. Again good agreements can anticipate and prevent future problems
NAMES and TRADE NAMES
Anyone or corporation can register a TRADE NAME with Alberta registries. The same trade name can be registered by more than one person. It does not provide name protection and would only be one factor considered if a dispute arose on the use of a name.
To incorporate under a name other than a number company a NUANS search must first be done to see if the name is available. This search lets you see if the same name is being used. If the name you want is identical or nearly identical to one already incorporated you may be unable to register under that name. If the names are close you may be able to register but may later face a legal action if the prior user feels you are infringing on his name.
A TRADE MARK can be registered with Ottawa through a trade mark agent. This is the most secure method to try to protect a name.
The general rule for use of a name is that by using of a name in a certain area for a certain type of business, over time gives the person using that name the right to argue that they have built up a reputation and good name and have the right to restrict others from profiting by their good name.