May, 2022
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Business Law in Canada – Essentials For Entrepreneurs
Last Updated on December 23, 2022 by Shayna Beeksma
Disclaimer: This article on business law in Canada is intended for the purposes of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
If you are an entrepreneur, then you know that there is a lot to learn. There are so many things that go into running a business, from marketing and sales to finance and operations. It can be overwhelming trying to learn it all!
However, there is one area that you cannot afford to neglect and that is the legal part of your business.
Business Law in Ontario
That’s why we have put together this comprehensive guide on everything an entrepreneur needs to know about business. In this guide, we will discuss the most important topics that every entrepreneur should be familiar with.
Specifically, we will outline:
- The different types of businesses in Ontario
- The importance of contracts and the types that your business may need
- Whether you should incorporate your business, and if you do, what does that mean for your business
- How to find legal advice that you can trust
At Beeksma Law, we are passionate about helping entrepreneurs and small businesses. Not only are we a small business, but we are also incredibly active within the business community.
Shayna Beeksma, founder of Beeksma Law, is active in the business community, including serving on various boards and mentoring other entrepreneurs and helping them grow their businesses.
If you would like to learn more about how we can help you, please contact us today! We would be more than happy to chat with you about your specific legal needs.
Types of For-Profit Businesses in Ontario
There are five types of businesses in Ontario: a sole proprietorship, a partnership, a joint venture, a limited liability partnership, and a corporation.
A sole proprietorship is a business owned and run by one individual with no distinction from the owner.
Partnerships have 2+ owners who share the profits and liabilities, but are not a unique entity. They also share in the liabilities of the partnership.
Joint ventures are when 2+ people collaborate on a project. They may contribute their capital and/or skills, but have an agreement in place to keep their profits and liabilities separate.
Limited liability partnerships are a combination of a partnership and the tax benefits of a corporation. They are limited to certain professions, such as lawyers and accountants.
Finally, a corporation is a distinct legal entity that is owned by the shareholders. The law treats a corporation the same as a person – it can be a party in a litigation claim, buy and sell property and enter into agreements.
Registering Your Business
We are often asked if you need to register your business name. In Ontario, you need to register your business name if you are doing business as anything besides your legal name. You can apply for a master business license online – it is a fairly easy process. Master business licences are valid for five years. Once you register yours, be sure to mark the date that it will need to be renewed.
Handshakes are not enough – you need contracts!
As an entrepreneur, you will be entering into a lot of agreements – with suppliers, customers, employees, contractors, and more.
It is important to have these agreements in writing so that there is a clear understanding of the expectations and obligations of each party. It does not matter whether or not you know the person, or even if it is a close relative.
Your best evidence if something goes wrong is a written contract. You have worked hard to start and grow your business – protect it by getting contracts in place!
Types of Agreements
There are different types of contracts, such as supply agreements, employment contracts, non-disclosure agreements, and more.
You should always seek legal advice before signing any contract. A lawyer can help you understand the terms of the agreement and make sure that it is in your best interests.
We often see online that entrepreneurs ask others for a template contract. We cannot stress how big of a mistake that is!
A contract is a legally binding agreement; you must tailor it to your specific needs. Often, these templates do not consider your business and may not even be from your jurisdiction. The laws vary from country to country and even from province to province. A one-size-fits-all approach will not work – you need to have a lawyer draft a contract that meets the unique needs of your business.
You may not want to spend money to have contracts properly prepared, but trust us, the cost is significantly less than what you would pay if something goes wrong and you end up dealing with a dispute.
Types of Contracts and Agreements You May Need
The following are contracts that your business may need. It is certainly not an exhaustive list, but it will give you an idea of the types of agreements that are commonly used in business.
Service Contract
A service contract is used when one party will provide some service, whether it is a one-time event or ongoing. It will contain details of the service and how long it will take to provide, as well as payment details.
This contract should also have a termination clause so that either party can end the contract without penalty, especially if the other side is not fulfilling their obligations.
Website Terms of Use Agreement
You likely have or will have a website, and as such, your website needs website terms of use. It sets out what visitors to your website can and cannot do with the information contained therein. For example, a strong agreement will contain copyright protection warnings or sets forth any disclaimers related to the information on the website. It will also contain a privacy policy that outlines the collection and use of any personal information obtained.
Non-Disclosure Agreement (NDA)
In order to do business, you sometimes need to share information. An NDA, also called a confidentiality agreement, protects the confidential information of your business.
Lease
If your business has a physical location, you are likely going to be leasing that space and will have an agreement that outlines your relationship with the landlord. While your landlord will typically provide you with the lease, you will want to ensure that your lawyer reviews it before you sign.
Partnership Agreement
If you are in business with someone else, you absolutely need a contract to set out the expectations and obligations of that partnership. There can be many disagreements that arise in the absence of a strong partnership agreement. Ideally, you have one drafted before you start your business, but you can have it written up at any point.
If there is no partnership agreement, the Partnerships Act has default rules that may not be to your benefit. Therefore, it is prudent to put a formal agreement into place that sets out the terms of the partnership clearly.
Incorporating Your Business
There are pros and cons to incorporating your business.
Since a corporation is its own entity (as noted above), one benefit is that it can continue even if the shareholders change or pass away. Additionally, it allows the shareholders to keep their business debts and liabilities separate from their personal ones. Generally speaking, liability is limited to the corporation itself and not to the shareholders, except for what the shareholders have invested into the corporation.
Additionally, your accountant may recommend that you incorporate so you can take advantage of tax benefits, such as a lower tax rate.
Conversely, there are also some disadvantages to incorporating.
If you will be pulling out all of your dividends and leaving no money in the corporation, then you miss out on corporate tax benefits and may receive a hefty tax bill. Your accountant will also charge higher tax preparation costs.
There is also paperwork – such as your minute book – that must be prepared on a regular basis. You must also file forms with the government when there are certain changes, as well as your annual return.
Do I Need a Lawyer to Incorporate?
Strictly speaking, no. You could file your Articles of Incorporation and pay only the filing fee.
However, this is one of those situations where you will save money, only to pay more later. Articles of Incorporation can be amended with Articles of Amendment but the cost to prepare those far outweighs preparing it correctly the first time.
It is absolutely to your benefit to speak to a lawyer before incorporating.
Keeping your Corporate Records Up To Date
As noted, corporations require a minute book that must be kept up to date. Your minute book is a corporate record that documents the proceedings of your directors and shareholders. Consider it a snapshot of your business.
At a minimum, this must be updated on an annual basis to be compliant with the appropriate legislation. Third parties may also ask you to produce your minute book – for example, a lender may request it when you apply for financing.
Business Law in Canada – Finding Legal Advice You Can Trust
It’s been said that advice is like mushrooms – the wrong type can be fatal. When it comes to business law, you need to be very careful about what advice you follow because it can destroy your business.
At Beeksma Law, we are not only legal professionals with years of experience, but we are also entrepreneurs. We understand the challenges you face and can provide practical, straightforward advice to help you overcome them.
We are skilled advocates and want our clients to have successful thriving businesses. That is why we are so passionate about giving you a strong legal foundation on which to grow your business.
If you have any questions about business law or need assistance with incorporating your business, please contact us. We would be more than happy to help you.
Do’s and Don’ts of Buying a Business in Ontario
Last Updated on December 15, 2023 by Shayna Beeksma
Disclaimer: This article on The Dos and Don’ts of Buying a Business in Ontario is intended for the purposes of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
You have found an incredible business opportunity and great news! The owner wants to sell it to you. Immediately, you start dreaming of the next steps after buying the business. But before you get too ahead of yourself, let’s take a step back. In our experience, quick decisions often lead to lengthy regret.
There are many things to consider when making this decision. If you’re not careful, you could end up making a mistake that costs you time, money, and headaches. In this blog post, we’ll discuss what to do, and what to avoid, when buying a business in Ontario – so that you can make an informed decision and avoid common pitfalls.
Of course, if you are considering buying a business and want to make sure your transaction is as smooth as possible, book your complimentary consultation today. Our team would be more than happy to speak with you about the specifics of your purchase.
DON’T: Rely on verbal agreements.
“He said, she said” will not protect you if something goes wrong. You need a properly drafted agreement prepared by a lawyer. Speaking of which…
DO: Hire a lawyer and an accountant
“But I know the seller”
It doesn’t matter if it is your best friend, your cousin, or your dog-walker. Hire a professional to help you navigate the legalities and finances of the purchase. They will help ensure that everything is above board and that you are getting what you think you are paying for.
Your lawyer will ensure that you have negotiated and agreed upon all the important terms in the purchase agreement, including many that you had not even considered. Your accountant will help you understand the financials of the business and will have advice on how to structure the transaction to minimize any tax implications.
We cannot stress enough how vital it is that you have professionals on your team to advise you.
DON’T: Underestimate the importance of due diligence
You wouldn’t buy a home without first taking a look inside, would you? The same logic applies when buying a business.
You need to understand all aspects of the business before making an offer. This includes everything from the financials to the contracts to the relationships with vendors and customers.
DO: Consider what happens after the transaction has been completed
In addition, you also need to ensure you know what liabilities the company has, because you may be taking on some of those liabilities with the purchase. This includes remittances and accounts payable, as well as any current or future litigation.
You need to be clear when that liability begins – for example if someone is injured using the business’ assets, who is liable for that injury?
If the existing business has employees, you must consider how you will treat those employees. You will want to ensure you know what your obligations are under the Employment Standards Act.
DON’T: Assume you know what is included in the sale
This sounds very basic, but it is a mistake that many buyers make. They assume that because they are buying the business, they are buying the name, customer list, inventory, and all of the other assets.
In reality, you need to specifically negotiate what your purchase includes. Otherwise, you may find yourself without some of the key components needed to run the business because expectations are different post-closing.
DO: Ensure you have the proper third-party approvals if necessary.
While the agreement may be between you and the seller, you may need to consider other parties when buying a business.
One example that comes to mind relates to leased properties. If part of the sale includes assigning the lease of any property, does the landlord need to be notified? Can the seller assign the lease or will you be negotiating a new lease with the landlord?
Or, if you are taking over a regulated business, does the regulator need to approve the transfer? If the business holds a license to be able to operate, is that transferable?
If the business is owned by a corporation, do you have approval from the shareholders? Is there anything in the Articles of Incorporation that prevents you from purchasing this business?
If you are a professional, within a professional corporation, and now you’re trying to use that corporation as a vehicle to purchase another business and run that business through, you need to double-check if you can actually do that. Your articles of incorporation may prevent you from running that kind of business through it.
These are all important questions that need to be answered before you can proceed with the purchase.
DON’T: Delay in contacting Beeksma Law.
At Beeksma Law, our team of experienced business lawyers can help you with all aspects of buying a business. We can help you negotiate the purchase agreement, understand the due diligence process, and get the proper approvals in place.
Our experienced business lawyers have negotiated successful transactions and handled the litigation files that result from improperly planned transactions. That vantage point gives us an edge in helping our clients plan and execute transactions while avoiding any pitfalls or other potential problems down the road.
If you are considering buying a business in Ontario, or have already started the process, contact Beeksma Law today to ensure your transaction goes smoothly.
What You Need to Know About Estate Law
Last Updated on January 30, 2024 by Shayna Beeksma
Disclaimer: This article is intended for the purposes of providing information on wills and estates law only and is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
What are you leaving behind? No matter who we are, we all think about our legacies. What are we leaving behind, and how will our loved ones remember us?
Regardless of what we are leaving behind, we want to make sure that we have a plan. A poor or non-existent estate plan leaves a legacy of stress, paperwork and expense. A well-planned estate adds comfort and stability in a time when it is much needed.
We know that you treasure and cherish your loved ones. That is why we think that a well-thought-out estate plan is truly the best gift that you can give your family.
An estate plan is a set of documents that detail how you want your assets to be distributed after you die. This can include your house, savings, investments, and personal belongings. Your estate plan can also designate a guardian for your minor children or other dependents.
An estate is a reflection of your life, and each one is different. There is no “one-size-fits-all” so to have an estate plan that truly reflects what is important to you, it is essential to get sound legal advice.
At Beeksma Law, we believe everyone should be empowered to understand how the law affects them. We encourage you to book a call with our team to discuss your estate. Learn more by scheduling your consultation here.
Your Guide to Wills and Estates Law in Ontario
In the meantime, this article will outline a number of subjects related to estate law to help you understand the basics, namely:
- What is estate law?
- What is a will? Why do I need one?
- How often should you update your will?
- What makes a will valid?
- What is an executor and how should I choose one?
- What is probate?
- What is a power of attorney?
- What is a certificate of pending litigation?
- What is guardianship?
- Recent Changes to the Succession Law Reform Act
- Make sure your estate planning is right for you
What is estate law?
Simply put, estate law deals with how a person makes decisions about how others will care for themselves and their property. Commonly, we think of estate law as carrying out someone’s wishes after they have passed away. While that is a large part of estate law, it also involves managing someone’s affairs while they are still alive if they cannot do so themselves.
Estate law can be both transactional (meaning it involves drafting documents) and litigation (meaning settling any disputes).
The information below first deals with estates in the event that someone passes away, and then about powers of attorney and handling someone’s affairs while they are still alive.
What is a will, and why do I need one?
A will is a legal document that states how someone wants their property to be distributed after they die. It is important to have a will because, without one, the government will decide how your property is distributed according to intestacy laws.
This means that if you die without a will, your property will go to your closest relatives, even if that was not your preference.
It is important to note that a will does not just deal with physical property. It can also be used to appoint a guardian for minor children and express your wishes for funeral arrangements.
How often should you update your will?
This truly depends on you and your life. You would definitely want to update your will when you experience any major life changes. This can be personal changes, like getting married and having children, or big purchases, like buying a home.
You should also review your will every few years to make sure that it still accurately reflects your wishes.
What makes a will valid?
Unless a will is handwritten (see below for information on handwritten, or holograph, wills), the requirements for a valid will are:
- It must be a physical, hard copy, and not in a digital format.
- The person making the will must be over 18, unless they are married, or are a parent.
- The person making the will (the testator) must be of sound mind.
- There must be witnesses to the testator signing the will. Those witnesses cannot be an executor (or his/her spouse) or a beneficiary (or his/her spouse). Virtual witnessing is possible if one witness is a lawyer or licensed paralegal.
- The signatures must be at the end of the will.
Can a handwritten will be valid?
Yes – if certain conditions apply. Holograph wills do not require witnesses and only need to be signed by the testator. It must also be entirely in the testator’s handwriting (no typewritten portions) and clearly not be a draft.
It is up to the person seeking to deem the holograph will valid to prove that it meets those requirements.
If the handwritten will is deemed invalid, the previous will would be used, or if there is none, then as if the person died intestate (or without a will).
What should I do with my signed will?
When it comes to storing your estate documents, the key is making it easy for your executor to find them quickly and securely once you’re no longer around. A practical choice for many is getting a fire and waterproof file folder, which is both affordable and safe, and keeping it at home.
The trick is to share the location only with your designated executor, sparing the need to inform other family members or beneficiaries.
Although some might consider using a safety deposit box, it’s not the best idea. In case of incapacitation, your executor could face a tricky situation, having to prove their right to access the box when the necessary proof is actually inside it.
What is an executor or estate trustee?
Simply put, the executor is the person (or people) who will be responsible for carrying out the wishes set out in the will. You may see two terms: executor or estate trustee – these terms are interchangeable. The executor may be named in the will, but if not, the court will appoint one.
- The duties of an executor include:
- Making funeral arrangements
- Determining the value and managing the distribution of your assets, as outlined in your will
- Applying for probate
- Preparing an accounting of the estate assets
- Filing the tax returns and applying for the Certificate of Clearance
- Paying off any debts or taxes owed by your estate before distributing the remaining assets
- Keeping accurate records
Who can be an executor?
To be an executor in an Ontario, you must be over 18 and have the capacity to act. That’s it. They do not need to be a relative, or live in Ontario.
You can appoint more than one executor, although you will want to make sure that any co-executors can work well together. You can also appoint a lawyer or another professional, to act as your executor.
In addition to executors, you would be wise to name a backup executor. That person would be your executor if your first choice is unwilling or unable to take on this task.
How should you choose an executor?
As you can see, being an executor is a significant role and requires a lot of time and energy. Therefore, you want to choose your executor wisely.
Ask yourself:
- Who do you trust to follow your final wishes?
- Who is organized and detail-oriented?
- Who has the time to commit to this role?
What is a beneficiary and what rights do beneficiaries have?
A beneficiary is a person who is entitled to receive assets from a will or an insurance policy.
If you die without a will, your spouse and/or children are automatically considered beneficiaries and are entitled to receive your estate. In the absence of a spouse or children, your parents or other close relatives may be considered beneficiaries.
Beneficiaries have the right to:
- Receive your bequest from the executor as soon as he or she is able to release it.
- Be notified when the estate executor applies to court for a Certificate of Appointment of Estate Trustee, also called probate
- Ask questions about the original assets of the estate as well as ongoing accounting of the estate
What is probate?
Probate is the legal procedure to ask the court to:
- give a person the authority to act as the estate trustee of an estate;
- confirm the authority of the person named as executor in the will; and
- formally approve that the deceased’s will is their valid last will.
What is a certificate of pending litigation (CPL) and when should you use it?
A court will issue a CPL and have it registered on title to a property. It gives notice that there is a claim related to the property underway, and prohibits anyone from selling or mortgaging the property.
You may need one if your rights to property are being challenged, and you want to protect them. For example, there may be disagreements about an estate’s beneficiaries, or what is included in the estate.
What is a power of attorney?
A power of attorney gives someone the power to make decisions on your behalf.
There are two kinds of power of attorney: a power of attorney for property and a power of attorney for personal care.
A power of attorney for property relates to how your property is handled and cared for if you become incapable of managing it yourself. However, a power of attorney for personal care comes into effect if you become incapable of making decisions about your own health care and personal welfare.
You can name the same person to be your attorney for both property and personal care, or you can name different people. You can revoke a power of attorney at any time, as long as you are still mentally capable, but it will automatically become invalid when you die.
What is guardianship?
Guardianship is the process by which someone assumes the decision-making responsibilities of an incapable adult.
Mental incapacity means someone cannot make decisions for themselves due to illness or injury. While that may sound vague, it is determined by a specific class of specially trained professionals called capacity assessors.
There are two areas where guardianship may be needed: property or personal care. A person may be capable of making some decisions and not others so the guardian would be limited to the decisions that an incapable person cannot make, as determined by the courts.
Guardianship applications are brought before the courts if:
- a person does not have a guardian and requires one;
- the Office of the Public Guardian and Trustee has been appointed as a guardian, and you would like to replace them.
Make sure your estate planning is right for you
Your estate plan should reflect your unique situation, the composition of your family and other circumstances. You should review it regularly to make sure it still meets your needs.
While there are will kits available, it is always advisable to have a lawyer prepare your will so it meets all the legal requirements and correctly reflects your wishes.
An up-to-date will, paired with other key estate planning documents, can give you comfort, knowing that your loved ones will be cared for according to your wishes.
Estate planning can be a complex and daunting task, but it doesn’t have to be. Our team can help you navigate the process and ensure that your wishes are carried out. Contact us today to get started.