The Top 5 legal aspects to consider before starting your business
What are the key legal decisions when taking a leap into entrepreneurship?

Are you thinking about saying goodbye to being an employee and becoming your own boss? How will your new business be structured, how will it be financed, and do you need any licenses or permits for your new venture? – Corporate and securities lawyer, Joseph Chiummiento, of Core Lawyers, provides insight on the top 5 things you should consider on your way toward entrepreneurship.

1. Choose a business structure

There are several types of business structures in Canada: sole proprietorships, partnerships, corporations, and cooperatives. In a sole proprietorship, the owner receives all of the profits of the business and is personally liable for all of the debts and obligations that stem from the business. On the other hand, a partnership allows for two or more owners to share in the profits, management, and losses of the business. In a corporation, the business is considered to be a legal entity that is separate from its owners. The shareholders share in the profits of the business and cannot be held personally liable for the debts or obligations of the business. A co­operative is made up of several members that collectively own and control the business, whereby all members pool their resources, share the profits of the business, and are entitled to limited liability.

2. Limit the “People Risk”

It is important to understand that, in any business, the biggest risk is in the people. Everyone has a great idea or a great product, but the most successful businesses limit the “people risk.” When deciding on how to structure your business, you should give careful consideration to the types of individuals you will be working with, and the types of roles assigned to each individual. By selecting individuals who are the most suitable for your business, you will have a much greater chance of achieving long-term success.

3. Give it a name

After deciding on the type of business structure you will have, you will need to register the name of your business. The Ontario Business Names Act (BNA) sets forth the rules and procedures relating to the registration of a business name. When your business name is registered, you will be issued a Master Business Licence, which can be used to prove such registration at financial institutions and for carrying out transactions with the Ontario government.

4. Add funds

Upon registering your business name, you may need to consider appropriate means of financing your business. Possible financing options include loans, incentives, and grants. The business structure will determine whether you are solely responsible for funding your venture or if you have partners to contribute, as well. Especially grants, private or public, may be a viable option for your startup, and it is crucial to carefully research all opportunities available to you. {LINK TO FREE RESOURCES PAGE}

5. Consider permits & regulations

In addition, you must determine whether or not permits or licenses are required for your business to operate. Further, you must be aware of any regulations that may impact your operation and ensure that your business remains compliant with such regulations.

To open a new company, a lawyer can assist you with filing articles of incorporation, a business registration, a name search and what corporate structure may be best suited for your venture. Depending on your long-term plans or your accountant’s instructions, your lawyer can also help guide you on proper shares to be issued, i.e. Common Shares, Preferred Shares, and Special Shares, set up a minute book and become a trusted source of advice as an outside general counsel to protect you and other owners and your business from any future risks or liabilities.

If you are considering entrepreneurship, speaking to a professional lawyer or accountant can help you with your specific needs.