How to Incorporate a Business

When starting a new business or non-profit organization, it is important to set up the legal structure correctly. There are several ways to make this happen, as well as an explanation about what it means for a business or non-profit to be a corporation.

Alberta Corporations

What is a corporation? A corporation is an independent legal entity that exists separate and apart from its owners (shareholders). The corporation essentially acts as a “person”.

A corporation can: 

buy, sell and own assets, including land  
make contracts  
sue  and be sued

Contrary to popular belief, a business does not have to be large to register as a corporation. In fact, a small business with only one owner can register under this category.

If a business owner requires assistance in deciding if a corporation is the best form of business. It is highly recommended that they seek professional legal advice.

Out-of-province Corporations

If a business owner’s corporation was formed in another province or country, it must be registered to do business in Alberta. 

Registering a corporation in Alberta removes the need to have separate corporations in every place an owner’s corporation conducts business. 

A corporation is considered to be doing business in Alberta if:

it solicits business in Alberta  
its name, or any name under which it conducts business, is listed in an Alberta telephone directory or appears in any advertisement with an Alberta address  
it has a resident agent, representative, warehouse, office or place of business in Alberta  
it’s licensed or registered, or required to be licensed or registered, under any Act of Alberta allowing it to conduct business  
it owns land in Alberta

Non-profit Companies

Organizations can choose to incorporate a non-profit company when they want a legal structure that is similar to the structure of a for-profit corporation. 

There are two types of non-profit organizations: private and public. 

An individual or group running a non-profit should seek professional legal advice if they need help deciding in which type of company is best for the needs of their group or if a society is a better legal structure.

Below is a break-down of what it means to be a private non-profit, a public company and a cooperative.

Private Non-Profits

At least two people are needed to form a private non-profit organization, which operates under the following restrictions:

it can’t have more than 50 shareholders or members  
it can’t sell shares or memberships to the public  
it restricts or forbids share or membership transfers

Public Companies

At least three people are needed to form a public company. A public non-profit organization doesn’t have the restrictions of a private organization. 

Cooperatives

A cooperative is a business organization started by people who want to:  

use services or buy goods as a group  
have an equal say in how the business is run  
share in any profits the business makes

Alberta-based cooperatives must be incorporated and out-of-province cooperatives wanting to do business in Alberta must be registered under the  Cooperatives Act.  

For expert legal advice regarding organizations, business and corporations, contact KGPC LLP today.