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No nonsense information on small business.

Aug 23, 2011 - 3 minute read - Comments - legal

How To Incorporate a Business In Alberta

This post is about registering a provincial corporation in Alberta (For the difference between a federal and a provincial corporation see our previous blog post). There are a number of advantages to a federal corporation. If you plan on doing business in other provinces, you should strongly consider federal incorporation.

The first step to registering your business as an Alberta provincial corporation is to see if the name you have chosen for your business is available. You cannot name your Alberta corporation the same name as an existing Alberta corporation.

Unless you choose to have your company given a numbered name (known as a “numbered company”, ie. 1234567 Alberta Ltd.) you will need to conduct an NUANS (Newly Upgraded Automated Name Search). For a federal corporation this can be done online through Industry Canada’s website, but for a provincial corporation you should use an Alberta based search provider. A list of online NUANS name search service providers can be found here. The cost for this name search will be about $25 but the price may vary as service providers add their own fees on top of the government’s fees for providing this service. This search is only good for 90 days so don’t do it too far in advance of submitting your Articles of Incorporation.

Corporation Structure

After naming your corporation, the next step is to decide on a corporate structure. This is one of the most complex parts of incorporating. A corporation that isn’t set up properly at the beginning can create problems down the road. You have to make decisions regarding:

  • Share structure
  • Any restrictions on the transfer of shares between different parties
  • The number of directors in the corporation
  • Any restrictions on the type of business that the corporation may conduct
  • Any other rules or provisions that you wish to include

Corporation Type

There are three types of corporations. They are distinguished by the number of shareholders and the way shares are bought and sold.

  1. The most basic form of corporation has 15 or fewer shareholders and shares are not publicly traded. This is the category most small businesses will fit into.
  2. Corporations with 16 or more shareholders but who do not sell shares to the general public have extra regulatory requirements. They must comply with specific provisions of the Business Corporations Act.
  3. Corporations with 16 or more shareholders that do distribute shares to the general public are subject to an even higher level of regulation where they must file documentation with the Alberta Securities Commission.

Consider Using A Lawyer

While it is possible to incorporate your business by yourself, unless you have a lot of experience in this, I wouldn’t recommend it. Filing the Articles of Incorporation is easy enough but creating good documents that include all of the information you need can be very difficult for a layperson. I recommend hiring a lawyer to do this for you (You can search for a lawyer here.) Lawyer’s fees are normally worth the expense because doing things right at the beginning can save you a lot of money later on.

If you are on a tight budget and don’t feel you can afford the fees, I recommend using a service like Legal Zoom.ca. They won’t give you service and advice tailored to your personal situation like a lawyer would but they’ll give you a good set of basic documents. A lawyer or an online incorporation service can also do the name search for you.

Incorporating a company can seem like a big, complicated process if you’ve never done it before but it really isn’t that difficult, particularly if you use a lawyer or a service to do it for you.

Aug 22, 2011 - 2 minute read - Comments - legal

Registering a Business Name in Alberta

It’s important to note the difference between a business name and the name of a corporation. A corporation is a distinct legal entity that will have a legal element such as Ltd., Inc. or Corp in its name. A business name is used by a sole proprietorship or a partnership as the name under which it is “doing business as”. Sole proprietorships and partnerships are not separate legal entities from their owners.

While there is no restriction on two sole proprietorships or partnerships having the same name, no two Alberta corporations can have the same name. Limited Liability Partnerships (LLP) are treated differently from regular partnerships as no two LLPs can have the same name in Alberta.

If you are doing business under a name other than your own personal name, you should register that name with the Provincial Government. This will be required by the bank before you can open a bank account. They will not let you deposit cheques made out to the business’s name otherwise.

The process of naming a business can be quite important as it will have long-term implications for your marketing and branding. There are also legal considerations that must be taken into account. If your business’s name is too close to that of an existing business or a trade-mark, you could wind up defending your choice of business name in court.

It’s best to avoid all of this by conducting a name search and by making sure that your business name is as unique as possible. A sole proprietor would register a trade name for his or her business. A partnership would register itself and its business name.

The Alberta Government has contracted out the business name registration process to a number of authorized service providers . Any authorized service provider will be able to provide basic business name registration services. Registering a business name is one of the steps of starting a business in Alberta. It’s a rather simple process that sole proprietors can do for themselves. Those of you who are registering a partnership or a corporation might want to have your lawyer handle the process for you in addition to drafting a partnership agreement or articles of incorporation.

Aug 17, 2011 - 3 minute read - Comments - legal

What You Need to Know About Trade-Marks In Canada

Trade-marks can be important. They can form an essential part of a business’s branding effort. It is not necessary to register a product name or a logo to establish a trade-mark because use of a name or a logo for a certain amount of time can establish a trade-mark under common law. However, it makes things much clearer if a company registers its trademarks. This is because a registered trade-mark is considered prima facie (direct) evidence of ownership.

What this means is that if someone wants to challenge a registered trade-mark, it falls upon them to prove the owner does not have ownership. If a trade-mark is unregistered, it falls on the supposed owner of the trade-mark to prove that they have established the right to it. This shift in the burden of proof can mean considerable time and lawyer’s fees for the trade-mark owner. For this reason alone, it makes sense to register your important trade-marks.

A trade-mark can be registered as long as it doesn’t contravene the Trade-marks Act. Some of the things that can’t be registered include:

  • names and surnames - John Smith or Smith, Jones and Johnson Partners cannot be registered as a trade-mark. There could an exception to this if you could prove that the name has transcended the person in the eyes of the public (think Walt Disney).
  • clearly descriptive marks - This is to prevent the use of adjectives and adverbs so that they can be available for general use. For example, Smith’s Fresh Orange Juice couldn’t be trademarked because “fresh” is a common adjective.
  • deceptively misdescriptive marks - Your trade-mark has to accurately represent your product. You couldn’t register Bob’s Organic Foods if the food was not in fact, organic.
  • geographic locations that describe the origin of a product - You could not trade-mark Saskatchewan Wheat for example, because it would give you an unfair advantage over all of the other wheat growers in the province.
  • words or designs that are too close to an existing trade-mark
  • words or designs that resemble a prohibited mark - You can’t register a trade-mark that comes too close to a wide variety of government and official symbols. In other words, no Canadian flags in your logo.

These are just some of the prohibitions that will get your trade-mark application denied. Most of these are common sense. If you are unsure as to whether your proposed trademark violates the rules, check with the Canadian Intellectual Property Office before filing your application.

Companies, individuals, partnerships, trade unions, and lawful associations can apply for trade-marks. A registered trade-mark lasts 15 years, which can be renewed every 15 years after that with payment of a fee.

To file a trade-mark application, it currently costs $250 online and $300 otherwise. A certificate of registration will cost an additional $200. As you can imagine, there are an assortment of fees for various forms of paperwork and other requests.

Many businesses choose to use a trade-mark agent to navigate them through the process. Registering a trade-mark can be a tricky process. There are no forms for registering a trade-mark. Applicants are asked to create their own application. For this reason alone, the extra cost of having a trade-mark agent do the work for you might make a lot of sense. A list of trade-mark agents can be found on the government’s website.

It can be difficult to decide whether the time and expense is worth the effort to register a trade-mark. If you market products or services that are heavily reliant on branding to differentiate them in the marketplace, you should give the idea of registration strong consideration.

Aug 16, 2011 - 3 minute read - Comments - business planning

How To Start A Business In Ontario

If you’re thinking of starting a business, the guide that follows will give you an overview of the steps you need to take to get up and running. Like all big projects, things are more manageable if you break them down to a series of smaller tasks. There will obviously be differences depending on where you are located in Ontario, but whether you are in Toronto or Thunder Bay, the overall process will be very similar. The steps that follow could be changed around slightly, depending on your approach to the process, but in general work through the steps from top to bottom.

The Business Idea

  • Think about whether you are ready to be an entrepreneur. Talk to your immediate family members to make sure you have their support. You don’t want to enter into a new business with along a reluctant spouse. (See our post on entrepreneurial attributes)
  • Evaluate your business idea. Does it require a new business model or are other businesses currently operating successfully using this model? (See our post on business models)
  • If you have a new business model conduct a feasibility study to confirm your idea is sound. (See our post on feasibility studies)
  • If your business is operating under a proven business model, conduct preliminary research to make sure that the business makes sense given your skills and finances. Make sure it makes sense for the market. (See our post on initial research)
  • If the your initial research or your feasibility study shows that your business idea has a reasonable chance of succeeding, continue to the next step, otherwise, go back to the idea stage.

Business Plan

Banking and Financing

Put Your Plan Into Action

  • Apply for a business license and any other licenses you need to operate your business. The Ontario Government participates in a website designed to handle this called BizPal. Not all municipalities participate in this service but it’s probably the best place to start. The site will ask you questions about your business and then suggest a list of licenses and permits to apply for.
  • Start implementing your business plan. Depending on your circumstances, this could mean signing property leases, buying and installing equipment and generally getting your business ready to open to the public.

As you can see, when a large project such as starting a business is broken down into smaller tasks, things become more manageable. If you feel like you need more information on parts of the process or if you would like us to cover additional tasks not on this list, please leave a comment below.

Aug 15, 2011 - 1 minute read - Comments - legal

The Difference Between A Trade-Mark And A Trade Name

A trade name is the name under which a company does business. A numbered company like 123456789 Ontario Ltd. could conduct business under a name like Paul’s Ice Cream. Paul’s Ice Cream would be a trade name. The name would be registered with the proper authority but it would not be a trade-mark.

A trade-mark is used to identify a product or service. If Paul called his ice cream True North Vanilla and True North Chocolate, True North could be considered a trade-mark. He would be well advised to register the trade-mark if he felt it was essential to his branding and marketing because proof of ownership would be much easier if there ever was a dispute.

In our example, Paul’s Ice Cream wouldn’t be a trade-mark because it is not directly used to identify a product or service. True North would be a trade-mark because of its close association with the product. The difference between these two names might seem like a small issue but it is important because intellectual property can be quite valuable. It can form part of a business’s competitive advantage and it should be properly protected.

Aug 11, 2011 - 2 minute read - Comments - legal

What Is A Trade-Mark?

The Canadian Intellectual Property Office defines a trade-mark as:

A trade-mark is a word (or words), a design, or a combination of these, used to identify the goods or services of one person or organization and to distinguish these goods or services from those of others in the marketplace.

This can be further broken down into three different types of trade-marks.

  • An ordinary mark can be words or a design or a combination of both that is used to distinguish a product or service from others in the marketplace. An example of this would be the words “Coca-Cola” or the famous Coca-Cola written in script on the side of the bottle.
  • A certification mark is used by an individual or organization to identify products that meet a certain standard. An example of this would be the Canadian Standards Association (CSA) logo seen on many of our products.
  • A distinguishing guise consists of the shape of a product or its container or a mode of packaging goods. The famous glass Coca-Cola Contour Bottle is an example of this.

Trade-marks are powerful because they prevent someone from trying to profit off an established brand. If I was to make my own cola drink and try to call it Coca-Cola, the Coca-Cola Company would have the right take me to court to defend their trademark. This protection is very valuable because it prevents counterfeit goods of dubious quality from flooding the marketplace and weakening an established brand.