Your business must respect certain legal formalities throughout its existence. Some apply only when your business is created, while others must be done on a regular basis.
Formalities when a business is established
Establishing a business involves several administrative and legal formalities. The main ones are explained below.
Establishing your business
The formalities to follow when creating your business depend on its legal structure. These can include:
- Formally creating your business with the Registraire des entreprises du Québec (Quebec business registry) or with Corporations Canada (this is called “incorporation”).
- Establishing the minimum and maximum number of directors in your articles of incorporation.
- Electing the first directors.
- Adopting the general by-laws, which are the rules for your internal management.
- Issuing shares to your shareholders.
- Choosing your fiscal year (12-month period covered by your financial statements).
- Opening a bank account
No matter what legal structure you choose, you must register your business with the Registraire des entreprises du Québec. Visit the website of the Registraire for instructions on completing your registration. These will differ depending on whether your business is
- a legal person, sometimes called a “company” (Inc.),
- a natural person (yourself), or
- a partnership (an agreement between two or more people to run a business).
GST and QST registration
You must generally register for the GST (federal) and QST (provincial) if you operate a business. However, there are some exceptions, for example, if your business is a “small supplier” according to Revenu Québec. To learn more, see the section How to Register for the GST and QST on Revenu Québec’s web page
If you do business outside Quebec, there may be additional formalities involved. You should inquire about the applicable rules with every other province or country in which you do business.
Some formalities must be completed on a regular basis, whether at the end of each fiscal year or at some other time. Once again, the formalities depend on the legal structure of your business. Here are the main formalities that apply to companies:
Approve the financial statements
Every year the board of directors must approve the financial statements for the previous year. Depending on the structure of your business, you might be required to present them to the shareholders or members.
Appoint an auditor
You must appoint an auditor every year to verify your records. In the case of a company, the shareholders appoint the auditor, but they can decide not to appoint one in certain situations.
The method for selecting directors depends on your business structure. For example, the shareholders elect the directors of a company.
When a director’s term comes to an end, the shareholders can
- re-elect this person if they are interested in continuing as a director, or
- choose another person.
The length of the term is provided in the company’s by-laws and is usually one or two years.
Once elected, directors can be named as officers (for example, president, treasurer) to handle certain aspects of the company’s management.
The company’s “minute book” is a collection of its important documents. You usually need at least one minute book that contains at least the following:
- articles of incorporation and general by-laws
- minutes of meetings, shareholder resolutions and resolutions of the board of directors
- directors’ names, addresses and dates of the start and end of their term
- securities register (share register) if applicable.
You must keep the minute book up to date to reflect the current status of your business.
For example, you must update the section on directors if a director resigns. You must also include resolutions passed by the board of directors or by shareholders when they make decisions.
Update information with the Registraire des entreprises
When a change occurs in your business, you must update your information with the Registraire des entreprises within 30 days. You can usually make the change by sending the Registraire a current updating declaration or an annual updating declaration.
Examples of changes that must be reported:
- business name
- head office
- name, address or position of a director
If your company was incorporated federally, you must update Corporations Canada when such changes occur.