So you’re ready to take the plunge and incorporate. Fantastic!!
But before you run off to some website which offers you a low-cost incorporation service (and I’m sure that same website will tell you how unnecessary lawyers are at the incorporation stage), here are some things to think about:
- Are you going to incorporate federally or provincially? (Do you know the difference?! Or why one would be preferable over the other for your particular circumstances?)
- Where will you be registering the business?
- Will the founders acquire all of their shares immediately? How many shares will you issue to each? Ten? A million? What will be the subscription price?
- Will there be any restricted stock?
- Are you going to issue any options to key employees who are not necessarily founders? (Oh, you are? Well, what does your stock option plan look like?)
- Do you have your employment agreements ready to be signed?
- Ditto for your confidentiality and intellectual property assignment agreements?
- Wait… You mean the low-cost incorporation service doesn’t offer all these? You mean they have big disclaimers saying they don’t provide legal advice and will not be held responsible for your mistakes in incorporating?! Can’t find the answers in their Q&A?!!
Ok, I’ll turn down the sarcasm. Seriously, consult a lawyer before you do anything on this front. I can’t tell you how many startups come and tell us that we don’t need to look at their minute book because “everything is done”. The second we starting asking any one of the questions above, shoulders droop, gazes are averted and frustration sets in…
Save yourself a lot of time and believe it or not, some money, and go see a lawyer first. It’s almost always more expensive for a lawyer to clean up mistakes like this than it is for the same lawyer to do the work correctly from the start.