Bob Gauvreau walks through what to get right when incorporating a business. Pick your name and effective date carefully, nail down who your initial directors and shareholders are (early ownership stakes matter if the company grows), and define your share classes to control dividends and voting rights. Work with an accountant and lawyer together to build a corporation that fits your actual situation.
Chapters
Okay, let's talk about how to incorporate or how to get your business incorporated. If you've heard me chat before, you'll know that I'm a huge advocate for introducing a corporation in the structure of a business. Why? Tax benefits? Okay, so we're not going to talk about that. If you want to look at tax benefits of incorporation, check out some of my other videos. But what I want to talk to you about is how it actually gets done. So what we have to do is we have to come up with a name, we have to determine the date that it's going to actually take place. We have to understand who the initial directors are and who the shareholders are going to be. Now this is really important to get this right. When we introduce shareholders, those are the owners of the corporation. Now we have to get it right, right out of the gates because the company is worth nothing right now. But six months from now, the company could be worth $1 million. If those owners aren't right in there, we have a lot of work to do to freeze the value of the company at a million and introduce new owners in the future. We need to get this right. We also need to focus on the share characteristics and attributes for every individual share class that's going to be in there. Because you may be the controlling partner or owner of the corporation and you may have individuals who are maybe lending money, who you want to be special class of shareholders where they are not participating in the value of that's getting increased in the company, that they're not subject to receiving dividends, or that it's at your discretion being the controlling owner of this business. So there's a lot of ways that we can structure a corporation. It's got to be tailored to you, what your needs are, what your family needs are, right? Maybe putting kids and other family members as shareholders for income splitting opportunities. Whatever it is, it needs to be personalized and it needs to be documented in the different share classes and the rules of how that corporation exists. So what I would highly recommend is that you work with your accountant who works with a lawyer, and as a team, they develop the best incorporation plan for you to minimize your taxes and protect your family.
