Step 1. Choosing the Right Business Structure

Choosing the right business structure is a crucial decision when it comes to how you register a business in Alberta. It determines not only how your business will be run but also how you’ll be taxed and what liabilities you’ll face. The three most common business structures used are sole proprietorships, partnerships, and corporations. Each one has its pros and cons.

Sole Proprietorship

A sole proprietorship is the simplest and most cost-effective business structure, especially for small businesses or individuals just starting out. As a sole proprietor, you fully control the business, but you are also personally responsible for all of its debts and obligations. This means that if your small business ever incurs debt or gets sued, your personal assets (like your house or car) could be at risk. However, a sole proprietorship is easy to set up and maintain, with fewer regulatory requirements than other structures.

Partnership

If you’re going into business with one or more other people, a partnership might be the right choice. In a general partnership, all partners share profits, responsibilities, and liabilities equally. While, in a limited or limited liability partnership, some partners may have limited liability based on their investment in the business. The downside is that, like sole proprietorships, general partners are personally responsible for the business’s debts. Clear communication and legal agreements are key to ensuring a smooth working relationship between partners with these business structures.

Corporation

A corporation is a separate legal entity from its owners (who are known as shareholders). This means that your personal assets are protected from business liabilities. This structure is more complex and expensive to set up and maintain but offers significant advantages in terms of limited liability and potential tax benefits. It’s also easier to raise capital and transfer ownership in a corporation, making it ideal for businesses with high growth potential or those looking to attract investors.

If you’re unsure which structure to register your business in Alberta, we recommend consulting a business lawyer. They can evaluate the pros and cons of each option based on your business goals and financial situation and guide you through any tax implications and legal obligations specific to your chosen structure.

Step 2: Choose a Business Name

Picking the right name for your business is not just a creative decision; it’s also a legal one. In Alberta, your business name must be unique and comply with specific naming rules. The name should clearly distinguish your business from others and avoid potential confusion with existing businesses. This helps protect your brand and ensures you’re not infringing on someone else’s rights.

NUANS Search

To ensure your chosen name is available, your lawyer can help you conduct a business name search using the NUANS report (Newly Upgraded Automated Name Search). This specialized database checks for existing names, trademarks, and similar business names across Alberta and Canada.

For those looking to incorporate, a NUANS report is mandatory to confirm that your business name is unique. For sole proprietorships and limited liability partnerships, it’s optional but highly recommended to prevent legal conflicts and confusion over duplicate business names down the road. Conducting this search helps you avoid costly rebranding or legal disputes later on.

Numbered Companies

If you prefer not to go through the process of selecting a unique business name or don’t have a specific business name in mind, you can opt to incorporate as a numbered company. A numbered company is an incorporation that operates under a number assigned by the Alberta Corporate Registry, such as “1234567 Alberta Ltd.” This allows you to skip the business name search and registration process. You can later apply for a trade name if you wish to operate under a more recognizable or branded name. Numbered companies are a good option if branding is not a priority or if you plan to select a name later.

Trade Name or Operating Name

If you’re a sole proprietor and plan to operate your business under a name that is not your legal name, you must register a trade name. A trade name is your operating name and is required for any business operating under a name different from the owner’s. For example, if your legal name is Sally Dawson but you want to operate as “Sally’s Beautician Studio,” you must register the trade name. This step ensures that Alberta legally recognizes and protects your business name.

Step 3: Register Your Business

Once you’ve decided on your business structure and chosen a name, the next step is to officially register your business in Alberta. This process varies depending on whether you’re registering a sole proprietorship, limited partnership, or corporation.

For a Sole Proprietorship or Partnership

If you’re operating as a sole proprietor, the registration process is required if you want to use a trade name. You’ll need to visit a Service Alberta Registry office or an authorized Alberta registry agent to do so. Be prepared to provide a report to confirm that your proposed trade name is unique.

If you’re operating as a limited partnership, the registration process is relatively straightforward. You’ll need to visit a Service Alberta Registry office or an authorized Alberta registry agent. Be prepared to provide a business name report to show that your proposed business name is unique and provide some basic information about your business. You’ll also need to fill out a registration form, which includes details such as your business address and contact information.

Once all the necessary information is submitted and approved, and the government fees are paid, your business will be legally registered, and you’ll receive proof of registration. You can use this to open a business bank account or apply for necessary permits or licenses.

For Corporations

If you’re forming an Alberta corporation, the process involves a few more steps and formal documents. To start, you’ll need to prepare incorporation documents, including your articles of incorporation. These documents outline the structure of your corporation, including the names and roles of directors, the type of shares you’re issuing, and the rules governing your business operations. For provincial incorporation, at least one of the directors or the agent must be a resident of Alberta.

In addition to the articles of incorporation, you’ll need to gather other required documents, such as your NUANS report, to confirm your business name’s availability and a notice of address, which includes your corporation’s registered office and address for service, where you will conduct business.

Once you’ve completed the required documents, you’ll submit them to the Alberta Corporate Registry along with the incorporation fee. After your application is processed, you’ll receive a Certificate of Incorporation, which is the official document confirming that your business entity has been legally incorporated. This certificate is essential for opening corporate bank accounts, applying for business financing, and demonstrating your legal status to potential partners or clients.

However, incorporation also brings ongoing responsibilities, such as annual returns and corporate tax filings, so it’s important to stay compliant with provincial and federal regulations. Reach out to an incorporation lawyer for the most up-to-date information on how to remain compliant.

Step 4: Obtain a Business Number and GST Registration

Once your business is registered, you’ll need to obtain a Business Number (BN) from the Canada Revenue Agency (CRA). This number serves as your business’s unique identifier for various federal tax programs. If your business is expected to generate annual revenues of $30,000 or more, you are required to register for a Goods and Services Tax (GST) number. The GST number allows you to collect and remit GST on taxable goods and services, ensuring compliance with Canadian tax laws.

Even if your revenue is initially below the $30,000 threshold, you may still want to register for a GST number voluntarily. Voluntary registration allows you to claim Input Tax Credits (ITCs) on GST paid for business expenses, which can be beneficial, especially in the early stages when investing in equipment, supplies, or services.

You can apply for your business number and GST registration online, by mail, or over the phone. In some instances, the business numbers can also be assigned automatically at the incorporation stage.

Once registered, the Federal Business Number assigned to your company will also be used for other CRA programs like payroll, corporate taxes, and import/export accounts, making it a vital part of your business’s tax and regulatory framework. Ensure you keep this number accessible as you’ll need it when fulfilling your tax obligations and for other official purposes.

Step 5: Obtain Required Permits and Licences

After registering your business, the next step is to ensure you have the appropriate permits and licences required to operate legally. The types of permits and licences you need depend on the nature of your business and its location.

Municipal Business License

In most municipalities in Alberta, including larger cities like Calgary and Edmonton, a registered business may be required to obtain a license to legally operate within the city limits. The requirements, fees, and application process can vary depending on the city and the type of business you’re running. You can check with your local city office or their website to understand the specific licensing requirements. For example, if you’re running a retail store or an online business, there are particular zoning and business license requirements that you may need to comply with.

Industry-Specific Permits

Some industries, such as food services, construction, or healthcare, require additional provincial or federal permits to operate legally. For instance, if you’re opening a restaurant, you may need permits for food handling and health inspections, while a construction business might require a contractor’s licence and building permits. It’s essential to research the specific regulations for your industry to ensure full compliance with both provincial and federal laws. Many registered businesses have neglected to obtain the necessary permits, which has resulted in fines. Failing to comply can even lead to authorities shutting down your business.

Step 6: Keep Records and Maintain Compliance

Once your business is up and running, maintaining proper records and staying compliant with ongoing regulations is critical to its success and legal standing. The specific compliance requirements will depend on the structure of your business.

Annual Filings

If you’ve incorporated your business, you are required to file an annual return with the Alberta Corporate Registry. This return keeps your corporation’s information up-to-date, including details about directors, shareholders, and the business’s registered office. Failing to file this return can result in your corporation being struck off the registry, effectively dissolving your business.

Minute Books

Corporations are also required to maintain a corporate minute book. This book is a record of all critical corporate activities, including meetings of directors and shareholders, resolutions passed, and changes to the business’s structure. It also contains key documents like the articles of incorporation, bylaws, and shareholder agreements. Minute books are essential to demonstrate corporate compliance and are typically reviewed during audits or business transactions, such as when selling the company or raising capital. Regularly updating your minute book is crucial for maintaining your corporate status.

Tax Filings

All businesses must file taxes with the Canada Revenue Agency (CRA), whether it’s personal taxes for sole proprietors or corporate taxes for incorporated businesses. If you have employees, you’ll also need to handle payroll deductions and remit taxes for them. If you’re registered for GST, you’ll need to file GST returns regularly, ensuring you collect and remit the appropriate amounts to the CRA.

Record-Keeping

Maintaining accurate and organized records is essential for managing your business efficiently and for meeting legal obligations. You should keep track of income, expenses, employee payroll (if applicable), and any other financial transactions. Proper record-keeping is important for tax purposes and will also help you monitor your business’s performance and growth. Records should be kept for at least six years in case they are needed for audits or other regulatory reviews.

By adhering to these ongoing requirements, you ensure that your business remains in good standing, avoids penalties, and is positioned for long-term success. Regular compliance not only protects your business but also reinforces your professionalism and commitment to running a legitimate operation.

Ready to start your business journey in Alberta? Our experienced business and corporate lawyers are here to guide you every step of the way. From selecting the proper structure to ensuring long-term corporate compliance, let us handle the legal complexities so you can focus on running your business.