League and Williams Lawyers

Tag: family business

  • Incorporating Your Small Business In British Columbia

    Incorporating Your Small Business In British Columbia

    Incorporating your small business in British Columbia can provide numerous benefits, including limited liability protection, tax benefits, access to government grants, enhanced credibility, and flexibility in ownership and management structure. In this article, we will discuss the advantages of incorporating your small business in British Columbia and explain the process of incorporation.

    Advantages to Incorporating Your Business

    Limited Liability Protection

    One of the most significant benefits of incorporating your small business in British Columbia is limited liability protection. This means that the shareholders’ personal assets are protected from the company’s debts and liabilities. In other words, if your business is sued or goes bankrupt, your personal assets such as your home or car will not be at risk.

    Tax Benefits

    Incorporating your small business in British Columbia can also provide tax benefits. Corporations can more easily deduct expenses such as salaries, bonuses, and benefits for employees. This can help reduce the overall tax burden on your business.

    Incorporating your business may require additional responsibility for reports on income and expenditures.

    Access to Government Grants

    Incorporating your small business in British Columbia can also provide access to government grants. The government offers various grants and funding programs to help small businesses grow and succeed. These grants can help cover expenses such as research and development, marketing, and hiring new employees.

    Enhanced Credibility

    Incorporating your small business in British Columbia can also enhance your credibility. A corporation is a separate legal entity from its shareholders. This means that incorporating your business can give it a more professional image and make it easier to attract investors and customers.

    Flexibility in Ownership and Management Structure

    Incorporating your small business in British Columbia can also provide flexibility in ownership and management structure. For example, corporations can issue different classes of shares with different voting rights. This can help you raise capital while retaining control over the company.

    Continuity Planning for Your Business and Family

    Drafting articles of association and incorporating your business can help provide a clear structure and plan when it is time to pass the torch in the family company. Ownership of the business and its assets can pass seamlessly when you decide the time is right, or upon your death. In this way, incorporating your business can simplify your estate planning if you wish to pass the business on to future generations. For more on how companies and company shares are passed down in estate law, read our article here.

    Incorporation Process in British Columbia

    The process of incorporating a small business in British Columbia is relatively straightforward. First, you need to choose a name for your corporation that is not already taken. You will then need to file articles of incorporation with the British Columbia Corporate Registry. The articles of incorporation should include information such as the name of the corporation, its purpose, the number of shares authorized, and the names of the company’s directors.

    Once you have filed the articles of incorporation, you will need to obtain a business number from the Canada Revenue Agency (CRA). You will also need to register for any necessary provincial or municipal taxes.

    Next Steps

    The process of incorporation is relatively straightforward but requires careful consideration and planning. If you are interested in incorporating your small business in British Columbia or have any questions about the process, contact an experienced corporate lawyer today.

    Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com

  • How are Company Shares Handled in BC Estate Law?

    How are Company Shares Handled in BC Estate Law?

    Upon an individual’s death, estate administration commences, and the executor undertakes the task of distributing assets to beneficiaries as per the deceased’s will. When the deceased has an interest in a private corporation, handling shares differs from managing simpler assets such as personal items or cash reserves. In this blog, we’ll discuss private company shares during estate administration and offer tips for estate planners with interests in privately held companies.

    Company Law and Estate Law

    Business owners or company share holders must carefully consider both company and estate law when creating a succession plan. This not only ensures efficient estate administration and asset distribution but also maintains the company’s health and continuity. Will writers should first comprehend the corporate structure of their involved company to avoid surprises during planning or post-death administration. Many people may be unaware that upon registration, corporations become separate legal entities with distinct rights from their owners. Corporations can be public, with stocks traded publicly, or private, owned by a limited shareholder group and not publicly traded.

    Understanding Your Company Shares Before Writing Your Will

    Will writers must fully understand their rights and liabilities concerning the company they hold an interest in to prevent confusion or litigation after their death. They should also know that after drafting and executing a will, it’s possible to create a new one or draft a supplementary document called a codicil for minor additions or changes. For more on this, read our article on writing a new will here, or on codicils here.

    The type of business interest held by the deceased is fundamental to the estate administration. If the deceased was the sole shareholder and director of a company, the executor must consider the following elements in the estate administration:

    • How will they safeguard the company and its assets while they are in possession of them during the administration process?
    • Do the articles of association (internal governing rules) of the company include any duties that the executor must adhere to during the probate and administration process?
    • How has the deceased elected to pass their shares down in the estate plan?

    Particularly for those who are sole-owners or hold shares in a private company, careful planning of their will is paramount. Further, it is important that will writers ensure the corporate organization and operation of their company follows all provincial and federal regulations to prevent litigation or other difficulties when passing down shares.

    Depending on its corporate governance and structure, shareholders of a company are subject to different rules and conditions when selling or transferring their shares.

    Where the Deceased is One of Many Shareholders

    If the deceased was one of many shareholders, the shares may be subject to special rules which govern the company. These rules are often found in a company’s articles of association, shareholders’ agreements, or other relevant contracts. It’s crucial for will writers to understand the rules governing share transfer and ensure their estate lawyer has the necessary information. This helps create an estate plan in line with their shareholder rights and responsibilities. Some examples of things included in a company’s articles or shareholders agreements that will writers and executors should be aware of are:

    Rights of first refusal: The company’s shareholders’ agreement or articles of association may contain a right of first refusal, which means that the company or the remaining shareholders have the right to buy the deceased’s executor can distribute them to the beneficiaries of their estate.

    Restrictions on transfer: The company’s articles may impose share transfer restrictions, impacting or placing conditions on the executor’s ability to manage and transfer shares.

    Capital Dividend Account: If the company has a capital dividend account, the personal representative must consider the tax implications of distributing the account to the beneficiaries.

    Navigating Share Transfer Complexities and Tax Implications in Estate Planning

    Provisions like rights of first refusal and transfer restrictions can complicate share transfers, possibly undermining the testator’s intentions. Tax implications related to certain assets, like capital dividend accounts, must be considered to avoid unintended financial burdens for beneficiaries. Addressing these concerns helps ensure estate management and distribution align with the individual’s wishes, safeguarding their legacy and providing financial security for loved ones. The complex nature of estate administration and private company share distribution requires careful planning and attention to detail. Will writers need a thorough understanding of the corporate structure, shareholder rights and responsibilities, and governing rules affecting share transfers. By considering these factors, will writers can create an estate plan ensuring efficient asset distribution while preserving the company’s continuity and stability.

    Navigating estate planning and private company share distribution complexities often requires an experienced lawyer’s assistance. Legal professionals have the expertise to guide you, identify obstacles, and develop goal-aligned strategies for your estate and company. They can ensure a solid estate plan, minimizing confusion or litigation risks, and providing peace of mind for you and loved ones. If you’re a shareholder of a private company, contact us for a consultation and take the first step toward safeguarding your legacy.