Incorporating with Founded
Founded makes it easy to professionally incorporate your business. With Founded, you get more than just the government-issued Articles of Incorporation. By following a simple step-by-step process, you corporation is fully structured, each person is properly assigned to a position, and shares are issued to shareholders. With a professional incorporation, you will be ready to conduct business, take on revenue, and prepare for growth and investment.
There are three main steps to completing your incorporation on Founded.
1. Choose Your Name
The name of your corporation is the first decision you need to make. While it is possible to change your name in the future, you should choose a name that you are comfortable using for the foreseeable future.
A good corporate name has three elements: (1) Distinctive Element, (2) Descriptive Element, and (3) Legal Ending.
Founded can help you find a name that distinguishes you from other companies. When you input your preferred name, Founded will tell you if anyone else in Canada is using that name. The distinctive element in your name consists of your brand name or the unique word that identifies your business. For example, the “Apple” in Apple Computer Inc. is the distinctive element.
The descriptive element describes the types of goods or services offered by your business. The descriptive element does not legally restrict you from conducting other types of business. Many companies use a broad and flexible descriptive term like “Solutions”, “Consulting, or “Technologies.” For example, the “Computer” in Apple Computer Inc. is the descriptive element.
The legal ending is the least important part of the corporate name. The ending just tells the public that you are operating an incorporated business. Founded lets you choose one of the following legal endings: Inc. (Incorporated), Ltd. (Limited), and Corp. (Corporation). The ending has no legal consequences. You can choose whichever you prefer as an abbreviation or full word.
Keep in mind that the corporate name is just the formal name that you will use to enter contracts, receive payments, and correspond with the government. This is not the same as a product or brand name. For example, when you’re eating at McDonald’s, you’re actually doing business with McDonald’s of Canada Restaurants Ltd. The brand name “McDonald’s” is protected under trademark laws, but the corporate name is longer and more specific.
Founded helps you navigate the legal requirements for corporate names in Canada. Once you choose a name that is right for your business, Founded files the necessary documents with the government to get final approval for your name.
2. Appoint Directors & Officers
Whether you’re big or small, every corporation in Canada must have directors and officers. It is very common for one person to be both a director and an officer of a corporation. Directors oversee the management of the corporation, while the officers are operating the day-to-day business.
If you’re the corporation’s only owner and manager, Founded makes the appointment of directors and officers extremely quick and simple. You just have to confirm that you are the sole owner and manager, then you will be appointed as the director and officer of the corporation.
If you have other people involved in managing the business, you will need to appoint officers and directors. Founded prepares all the necessary documents. For example, directors will have to confirm that they agree to take their position with the company by signing a Director’s Consent, which will be sent for e-signature from Founded.
Founded lets you create various roles for officers in your corporation. Officers are given titles to reflect their role as the corporation’s senior managers. Every corporation must have a President and Secretary, and these positions can be held by the same person. Other common officer titles include CEO, Vice-President, and Treasurer.
3. Define Share Classes & Issue Shares
Shares are the units of the company that determine who owns it. Without shares, you have no record of who owns what. Having no shares (or improper share documentation) becomes a massive problem when it comes time to sell your business, get investment, or apply for loans.
Founded issues shares to shareholders immediately after the incorporation process is complete. As your company grows, Founded will keep track of your shareholders over time.
But before you give shares to yourself or anyone else, you need to define the corporation’s share classes. Share classes exist because not all shares need to be the same. For example, it’s very common for companies to have both voting and non-voting shares. Voting shares are given to those people who want to maintain control over the corporation. Non-voting shareholders will still benefit from the corporation’s growth, and their shares may increase in value, but the non-voting shareholders will have to trust the voting shareholders to make the right decisions.
You can create unlimited share classes in the Shares section of Founded. You can easily select whether each share class will have voting rights. By switching to “Advanced” mode, you can choose more complex types of shares (called “preferred shares”) if you need them in your corporation for future planning or tax reasons. Click here to learn more about how to do that on Founded.
Once you create the share classes, you can distribute the shares to the shareholders. Founded has a flexible approach that lets you set up shares in a way that works best for you. You can choose a custom number of shares, or use our industry-standard default settings.