Frequently Asked Questions
No, you don’t have to incorporate. There are different kinds of business arrangements. These include Sole Proprietorships, Partnerships and Corporations.
There are reasons why you might want to set up your business in each of these arrangements. To find out which is best for you, get advice from a lawyer. Once you decide how you want to set up your business, you can do it on your own or with the help of a lawyer.
A sole proprietorship is a business owned by one person. Setting up your business as a sole proprietorship is easy. All that is usually needed to get a sole proprietorship started is to register the business name with the Companies Office and pay any municipal or city licensing fees that apply. The business income or losses are included in your personal income tax return. As a sole proprietor, you are personally responsible for all the debts and obligations of your business. This means that if a person sues you regarding a business matter, your personal assets will not be distinguished from those of your business and will not be protected from a claim.
A partnership is a legal relationship between two or more persons who carry on business together in order to make a profit. Setting up your business as a partnership can be simple. You can have a business partnership without any written agreement, but it is a good idea to hire a lawyer to make a Partnership Agreement so that each partner knows exactly what their rights and obligations are. You will need to register the business name with the Companies Office and pay any municipal or city licensing fees that apply. Your share of any income or losses of the partnership are included in your personal income tax return. As a partner, you are personally responsible for the full amount of all the partnership’s debts and obligations.
A corporation is a business organized according to the rules in either the Corporations Act of Manitoba or the Canada Business Corporations Act. (Certain types of businesses, for example, banks, trust and loan companies and educational institutions are governed by their own legislation). Once set up, a corporation exists as a separate legal being. The owners of a corporation are its’ shareholders.
Setting up a corporation is called incorporating. There are many rules about how to incorporate, and how to continue a corporation. Because incorporating is complicated, most people hire a lawyer to set up the corporation. A corporation’s income and losses are reported in a corporate income tax return. Shareholders of a corporation are responsible for the corporation’s debts and obligations only to the amount of their investment in the corporation.
A name notation reserves an organization’s name for three years with the Companies Office of Manitoba. It does not mean that the organization is incorporated. Additional steps must be taken to gain incorporated status
The Companies Office will review the names of organizations submitted and make sure that they are not too similar to existing names on their record. If the names are confusing then registration of the business name will be rejected.
The Business Names Registration Act provides a number of considerations in registration of a company name. Some of the reasons why a name may be turned down for registration include names that misdescribe the nature of a business and names that are objectionable or obscene.
The by-laws should set out the conditions of membership in the organization, meetings of the members, and voting. The number of directors and their terms of office are also addressed. The by-laws can also set out a fiscal year, record keeping, and details on how to amend the by-laws in the future. For more information see CLEA’s publication Not-for-Profit Organizations in Manitoba: Beginning and Incorporating.
The directors of an organization must call a meeting within 18 months of when the organization was incorporated. After that first meeting, the directors must call a meeting at least every 15 months from when the last meeting was held. Usually, annual general meetings are held approximately every 12 months. Notice of this annual general meeting must be given at least 21 days and not more than 50 days before the meeting takes place.
The Canadian Intellectual Property Office (http://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/Home) offers information on all types of intellectual property.
As a general overview, patents cover new, innovative, and useful inventions. The Canadian Patents Database can be accessed at http://www.ic.gc.ca/opic-cipo/cpd/eng/introduction.html.
Trademarks deal with unique words, symbols, or designs that are used to draw attention to the goods or services of a person or business. The Canadian Trademarks database is found at http://www.ic.gc.ca/app/opic-cipo/trdmrks/srch/home?lang=eng.
Copyright protection extends to original literature, and dramatic, artistic and musical works. The Copyright registry is at http://www.ic.gc.ca/app/opic-cipo/cpyrghts/dsplySrch.do?lang=eng.
If your organization qualifies for charitable status it is exempt from paying income tax. In addition, the organization can issue charitable receipts to individuals who donate to the organization. These charitable receipts can reduce the income tax payable by those individuals.
You have to file an Application to Register a Charity under the Income Tax Act. The forms and further information can be obtained by contacting the Charities Directorate at 1-800-267-2384 or at https://www.canada.ca/en/services/taxes/charities.html.
Directors have duties of loyalty, diligence, and obedience. They must act reasonably and in good faith, considering the best interests of the organization and acting within the existing framework of that organization. Directors have an obligation to make sure that employment-related remittances, taxes, wages and salaries are paid. Directors must also ensure meetings of members, reporting of minutes, disclosure of required information to authorities, and election of directors and officers. For more information see CLEA’s publication Not for Profit Organizations in Manitoba: Directors Liabilities.
No. Charitable status means that for federal income tax purposes, your organization meets certain requirements and has certain rights and obligations. Not every not-for-profit organization has charitable status.
The following records should be kept, pursuant to Section 20 of The Corporations Act:
A not-for-profit organization must be incorporated by three or more directors who are not bankrupt. For more information, see CLEA’s booklet Not-for-Profit Organizations in Manitoba: Beginning and Incorporating (https://www.communitylegal.mb.ca/publications-store/).
The Companies Office also has more information here: companiesoffice.gov.mb.ca/notices/non_profit.pdf