Incorporating options: costs

Revised November 2022

Most small business owners will, at some point, consider incorporating their business. The decision to incorporate involves quite a few considerations. Does the business generate enough revenue? Does the business operate in an area where liability is a real risk? What are the costs? In this blog post, I will only address the last question: “What are the costs?” While this may seem like a legitimate question, it shouldn’t be. If liability is a real risk, and the business generates enough cash to justify income-splitting, then you should incorporate, period. But most business owners must worry about things like cash flow and controlling expenses. Therefore, the question of costs remains. So let’s take a look at your options and the costs of incorporating:

The Do-It-Yourself Option

Cost: $395.00, plus the cost of a three-ring binder, pre-printed share certificates, and paper.

• Advantages: Yes, you can incorporate without the assistance of a lawyer. You must fill out a form from the Companies Office and pay your registration fee, and voila, you are incorporated. Currently, the fee for incorporation is $350.00 and $45.00 for a name search. (If you want to name the corporation yourself, you must search the name first, and provided it is available, register after). The biggest advantage is cost. You take out the middle-man.
• Disadvantages: The staff at the Companies Office can only receive your completed form and fee. They can’t provide any advice. So, for example, they can’t advise you on the number and type of shares. I often see corporations with “an unlimited amount of common shares.” If one of your goals is to income split (it should be!), this type of structure won’t permit that. Once you are incorporated, though, to remain compliant under Manitoba’s Corporations Act, you must record the incorporating minutes, issue shares, purchase your shares, adopt by-laws, and set up a minute book. You must also ensure that you complete your annual returns to the Companies Office (confirming your corporation’s information to keep your record there up to date). You must also pass annual resolutions.

The Lawyer Prepared Corporation Option

Cost: $2,000 and up exclusive of disbursements (Company Office fees, taxes, and disbursements)

• Advantages: a lawyer will provide you with a share structure that will allow you to issue several common voting, non-voting, and preference shares. This will permit you to income-split and restructure if and when necessary. The lawyer will also prepare your minute book and all of the incorporating minutes required under the Act. Your lawyer can also manage your minute book on an ongoing basis. While filing your annual return and passing annual resolutions is not rocket science, in my experience, many business owners fail to do so. This can have devastating consequences because the Companies Office will automatically dissolve your corporation, meaning that you will lose all the advantages associated with incorporating. 
• Disadvantages: cost. While most lawyers don’t advertise their rates, most first-time incorporators will pay anywhere from $1,950.00 (inclusive of taxes, Companies Office fees, and disbursements) and up.

The Staples Option

Cost: $900.00 to $1,000.00

• Advantages: this is a hybrid between the do-it-yourself and lawyer option. The advantage is still cost. While it is more expensive than doing it yourself, Staples will provide you with a minute book and incorporating minutes (I make no comment on the adequacy of the incorporating minutes). For an additional fee of $199.00 a year, they will manage your ongoing obligations for you.
• Disadvantages: they will only issue basic Common voting shares. This again won’t help you income split.

The Other Service Providers Option

Other organizations such as BDC, Cyberbahn, Oncorp Direct, and ESC Corporate Services offer the ability to incorporate federally and provincially in Ontario (BDC also offers the service in British-Columbia, Saskatchewan and Alberta). These are similar to Staples’ package, but they do not offer the service in Manitoba.

The TLR Law Online Incorporation Services Option

Costs $ 1,995.00 which inlcudes GST, PST, Company Office fees and all disbursements. $1,995.00 is all you pay.

• Advantages:  We can structure the shares to provide several voting, non-voting, and preference shares approved by accountants. Cost – while it is more expensive than the do-it-yourself option, it is comparable to Staples’s services. We will also provide you with incorporating minutes, minute book, share certificates, and registers. Your corporation will be compliant with the Corporations Act.
• Disadvantages: compared to the do-it-yourself option, cost.

Disclaimer – Legalese

This article is presented for informational purposes only. The content does not constitute legal advice or solicitation and does not create a solicitor-client relationship (this means that I am not your lawyer until we both agree that I am). If you are seeking advice on specific matters, please contact us at clientservices@tlrlaw.ca, or 204.925.1900. We cannot consider any unsolicited information sent to the author as solicitor-client privileged (this means confidential).