Business in Ontario
One of the first issues an entrepreneur needs to consider is the legal form in which to operate the business. The legal forms in which you can operate your business in Ontario are sole proprietorships, partnerships and joint ventures, incorporation. Examples of business situations in which you would require a lawyer are purchase and sale of a business, corporate reorganizations, franchise agreements and licence agreements.
Sole Proprietorship in Ontario
The sole proprietor has to register the business under the Ontario Business Names Act. Such registration does not provide limited liability and the entrepreneur is personally liable for the debts of the business.
Partnership in Ontario
If you are considering entering into a partnership it is important to understand the consequences of entering into such an arrangement. The Partnership Act and Business Names Act are the main statutes governing partnerships in Ontario. There are many issues partners may have to deal with including allowing in new partners, retirement and dissolution of the partnership, allocating liabilities of the partnership, management of the partnership, financing the partnership, confidentiality and non-competition to name a few.
The importance of having a partnership agreement that documents the agreement of the partners on the issues listed above cannot be stressed.
Shameela Chinoy has helped businesses in Ontario in preparing a partnership agreement and if you are interested more about how Shameela Chinoy can assist you with organising your business as a partnership or preparing a partnership agreement please contact us.
Incorporation in Ontario
Incorporation provides limited liability and peace of mind that a bad business judgement will not destroy the family's assets. In addition to limited liability there are other advantages to incorporation including the small business deduction for Canadian-controlled private corporations and the $500,000 capital gains exemption on the sale of eligible shares. Other advantages include estate planning such as estate freezes, reduction in probate tax and income splitting.
There are some issues that should be considered prior to taking the step to incorporate including which jurisdiction should the incorporation take place, an appropriate name for the corporation, organizing the corporation including issuing shares, appointing officers and directors, creating by-laws, written resolutions, setting up the minute book of the corporation and making appropriate governmental filings. As well incorporator(s) should consider whether there will be restrictions on the transfer of the shares. Certain businesses and professionals require regulatory approval. If you incorporate and there will be more than one shareholder it is recommended that you consider executing a shareholders agreement.
Incorporating a federal or Ontario corporation can provide numerous benefits. Shameela Chinoy has helped businesses set up their operations using the corporate structure and if you are interested in learning more about how Shameela Chinoy can assist you with incorporating your business please contact us.
Purchase and Sale of a Business
The purchase or sale of a business can be a challenging task to a business owner. The purchase or sale can be accomplished by either an asset sale or sale of shares. Each method has certain advantages and disadvantages depending on the exact circumstances or whether you are the purchaser or vendor. It is important that the business owner obtain both legal and accounting advice prior to structuring the transaction or entering into a purchase agreement to avoid nasty surprises.
There are several issues that need to be considered in a typical transaction for the purchase or sale of a business including intellectual property, employees, assumption of liabilities, tax consequences, allocation of purchase price and method of payment, non-competition agreements, compliance with various laws such as Bulk Sales Act and Competition Act. These can be achieved through appropriate due diligence, obtaining the required representations and warranties as set out in a properly drafted agreement of purchase and sale.
Shameela Chinoy has assisted businesses in Ontario in preparing agreements of purchase and sale and in the closing of transactions for the purchase or sale of a business. If you are interested learning more about how Shameela Chinoy can help you in the purchase or sale of your business, please contact us.
Reorganization of business
There are many reasons why the business may need to be reorganized including to accomplish estate planning or succession planning objectives, deal with a bankruptcy, and to creditor proof the business. In certain circumstances a business may continue in another jurisdiction or may amalgamate with another corporation. Sometimes it is necessary to wind up a corporation and at other times a corporation that has been cancelled needs to be revived. Other types of reorganizations include rollover of assets into a corporation, increasing or decreasing the stated capital of the corporation.
If you are interested learning more about how Shameela Chinoy can help you with the reorganisation of your business, please contact us.