Business incorporation

Incorporation creates a legal entity separate from you personally. The corporation can sign contracts, own assets, hire employees, and open bank accounts. It becomes relevant when you aim to structure long-term growth, limit commercial liability, and build a transferable or sellable business. It also allows proper share structuring and strengthens credibility with banks and suppliers.

As a self-employed person, you operate under your personal name and are directly liable for all debts and obligations. Income is reported on your personal tax return at the personal marginal rate, significantly higher than the corporate rate in Quebec. By incorporating, you create a separate legal entity. The corporation pays tax at the corporate rate, which is much lower. You control when and how you compensate yourself (salary, dividends, or both). Personal liability is in principle limited to obligations you have personally guaranteed.

Incorporation becomes relevant when your activity generates recurring income, involves contractual risk, or includes multiple stakeholders. It is strategic if you plan to retain profits to finance growth or welcome partners. The objective is to legally structure your activity in a coherent and sustainable way.

In most normal commercial situations, the corporation assumes its own debts. Your personal assets are therefore not automatically liable. However, certain statutory obligations or personal guarantees may engage directors' liability. Protection is strongest when financial separation between you and your corporation is rigorously respected.

Yes. It is possible to operate a corporation while remaining employed. However, your employment contract should be reviewed for non-compete or exclusivity clauses. Incorporation allows you to structure a side project without mixing income streams.

For consultants generating stable income, incorporation helps manage contractual liability, structure compensation, and reinforce professional image. It becomes particularly relevant as revenue increases or subcontractors are involved.

A shareholder owns shares and holds economic and voting rights. A director is responsible for strategic decisions and management. The same person may hold both roles, but their legal responsibilities are distinct.

If you primarily operate in Quebec without short-term national expansion plans, provincial incorporation under the QBCA is generally sufficient. It protects your name in Quebec. Federal incorporation under the CBCA is relevant if you want to operate in multiple provinces or protect your name nationally. A federal corporation must still register in Quebec to operate there, which involves additional steps and fees.

Yes. A federally incorporated company must register in Quebec as soon as it carries on business there. This registration provides a Quebec enterprise number (NEQ) and makes the corporation publicly listed in the provincial registry. It is a separate obligation from federal incorporation.

Yes. The majority of Lexstart incorporations are sole shareholder corporations. You will be simultaneously shareholder, director, and officer. The share structure can be set up from the start to allow for a future partner or investor without needing to amend the articles.

In Quebec, a corporate name must comply with the Charter of the French Language. It generally must include a French element or meet applicable linguistic rules. Exceptions apply for registered trademarks. A name availability check is recommended before submitting an incorporation request.

A corporate name must comply with registry rules (REQ or Corporations Canada), avoid confusion with existing businesses, and meet Quebec's linguistic requirements. Lexstart performs a name check as part of the incorporation process.

Share capital defines the ownership structure of the corporation. It determines how many shares can be issued and what rights are attached (voting, dividends, redemption). A simple structure suits solo founders, while a flexible structure accommodates future investors or partners.

Lexstart offers two main options: a simple structure with two share categories suited for solo entrepreneurs, and a flexible structure with up to 21 share classes for projects requiring advanced planning or investor readiness. The appropriate choice depends on growth, tax, and governance objectives.

The simple model includes two share classes: Class A shares with voting rights and an optional Class B without voting rights. This is sufficient for most entrepreneurs starting alone or with one partner. The advanced model includes up to 21 share classes with distinct rights (dividends, voting, liquidation). This is relevant if you plan to bring in investors, optimize dividend splitting between shareholders, or structure participation for key employees.

Common shares typically provide voting rights and residual profit participation. Preferred shares can include special rights such as dividend priority or liquidation preference. They are often used in investment rounds to protect investors and structure financial relationships between shareholders.

A startup's share capital should be structured according to its growth vision, potential investors, and founders' tax planning. A flexible structure allows multiple share classes (common, preferred, voting, non-voting) with distinct rights. This approach simplifies fundraising, protects founders, and allows future share issuances without repeatedly amending the articles.

Dilution occurs when a corporation issues new shares to an investor, reducing the ownership percentage of existing shareholders. When properly structured, a financing round allows capital injection while protecting founders through mechanisms such as anti-dilution clauses or separate share classes.

Yes. A corporation may issue new shares if its authorized share capital allows it. Issuing shares usually requires a board resolution and updating corporate records. Proper planning at incorporation reduces the need for costly amendments later.

Yes. A corporation may grant or sell shares to employees to align them with the company's growth. This strategy must be properly structured to avoid unintended tax consequences and comply with legal requirements regarding share issuance.

Yes. Shares must be issued in exchange for value, whether in cash, property, or services, in accordance with applicable rules. This consideration must be documented in corporate records to ensure legal validity.

You complete the smart online form in 15 to 20 minutes. It guides you step by step: structure type, company name (with real-time REQ and NUANS verification), directors, share capital. Once payment is completed, the team prepares and files the documents. You receive the articles of incorporation, organizational resolutions, share certificates, and minute book within an average of 5 business days.

A standard incorporation is generally completed within approximately 5 business days once all required information has been submitted and validated. This timeline includes drafting the articles, structuring the share capital, and filing with the appropriate registry. Government processing times may vary slightly, but Lexstart actively monitors each file.

Yes. The Lexstart team validates all information before proceeding with the filing. If anything is ambiguous or incomplete, we contact you directly to clarify. It is not a fully automated system: a qualified person reviews every file before filing.

If the error is noticed before the registry filing, the team can correct it at no extra charge. If noticed after filing, an amendment to the articles will be required and government fees will apply. The pre-payment summary is specifically designed to prevent this situation.

You receive the articles of incorporation, organizational resolutions, share certificates, and digital minute book. These documents form the official legal foundation of your corporation and are required to open a corporate bank account and complete tax procedures.

Lexstart collaborates with a specialized registered office partner, allowing entrepreneurs to use a professional address as their corporation's head office. This prevents personal addresses from appearing in public records. In Quebec, certain corporate information is publicly accessible, so using a registered office service enhances privacy while strengthening the company's professional image.

Yes. The Quebec enterprise registrar publishes certain corporate information, including directors' names and addresses. Following transparency reforms, ultimate beneficiaries must also be declared. Understanding this level of disclosure is important before incorporating.

Priority first steps: open a corporate bank account in your corporation's name (banks require the articles and minute book), confirm with your accountant whether to register for GST/QST immediately or wait for the applicable threshold, start invoicing under the corporate name, and keep personal and corporate finances strictly separate from day one.

After incorporation, you should open a corporate bank account, organize bookkeeping, review your tax obligations, and maintain your incorporation documents in your minute book to ensure ongoing corporate compliance.

Yes. A corporation is a separate legal entity and must maintain its own bank account. Mixing personal and corporate funds can undermine the legal protection offered by incorporation.

Lexstart does not directly handle bank account openings, but refers clients to the National Bank of Canada (BNC), a banking partner with streamlined processes for Lexstart clients that is familiar with the platform's documents.

Banks frequently require the minute book to verify directors' identities, share structure, and resolutions authorizing account opening or financing. An up-to-date minute book significantly simplifies all banking procedures.

Separating finances reinforces the legal distinction between you and the corporation. Mixing accounts can weaken liability protection and complicate accounting. A dedicated corporate bank account is essential from the very first day of activity.

Yes. Even without revenue or activity, your incorporated company has annual obligations: file the annual update with the REQ (or maintain federal good standing), file the corporate T2 tax return, and keep the minute book updated with annual resolutions. These obligations persist until official dissolution.

Yes. An incorporated company must file an annual corporate tax return even if no revenue was generated. This is part of maintaining good standing with federal and provincial tax authorities.

The annual update is a mandatory filing confirming the corporation's public registry information. It keeps the company in good standing and prevents administrative cancellation, even if the company has no activity.

Tax registration depends on your revenue level and business activities. Once the small supplier threshold is exceeded, registration becomes mandatory. Even below the threshold, voluntary registration may be strategically beneficial depending on your business model.

Registration becomes mandatory once the corporation exceeds the small supplier threshold within a specified period. From that point, it must collect and remit applicable taxes. Proper planning helps avoid penalties related to late registration.

Yes. A corporation can amend its articles to change its name, share structure, or other fundamental elements. Such changes usually require shareholder resolutions and filings with the appropriate registry. Proper initial structuring reduces the need for later amendments.

Amending the articles typically requires a shareholder resolution and filing articles of amendment with the appropriate registry. This may involve a name change, modification of share capital, or other fundamental corporate elements.

An ultimate beneficiary is the natural person who directly or indirectly owns or controls a significant percentage of shares or voting rights. In Quebec, this information must be disclosed to the enterprise registrar to ensure corporate transparency and prevent opaque ownership structures.

Although a corporation is a separate legal entity, directors may be personally liable in specific situations, such as unpaid payroll deductions, employee wages, or certain tax obligations. Diligent and compliant management significantly reduces these risks.

A struck-off corporation loses its active legal status and can no longer legally operate. It may need to apply for reinstatement or reconstitution. Prevention requires consistent compliance with annual and reporting obligations.

The minute book contains the articles, resolutions, registers of shareholders and directors, and share certificates. It serves as official proof of corporate decisions. In the event of a tax audit or bank financing, this document is essential to demonstrate the corporation's legal compliance.

Dissolution requires settling all debts, filing final tax returns (GST/QST, T2, TP-600), closing government accounts, ensuring the bank account is at zero and closed, and that no assets remain in the corporation's name. Once these steps are completed, articles of dissolution are filed with the appropriate registry. Accounting guidance is strongly recommended.

Dissolution requires settling all debts, filing final tax returns, and closing government accounts. Once completed, articles of dissolution must be filed with the appropriate registry. Professional accounting guidance is strongly recommended to ensure compliant closure.