Operating a business through a corporation has several advantages. The company will benefit from more powers and flexibility in the management of its operations, but don’t forget the tax benefits and limitation of the liability of shareholders. But what are your annual obligations as the head of a company?
Well, as Uncle Ben told the young Spiderman: “With great power comes great responsibility!”
A company incorporated as a corporation will therefore be responsible for complying with various legal provisions and obligations. Here are three of the annual obligations that will help you ensure the sound management of your company.
1. The Tax Return
The best remembered annual obligation is certainly the filing of the corporation’s tax return. Your accountant will be your best ally against this obligation.
2. The Annual Corporate Update
The corporation must also file its annual updating declaration with the Registraire des entreprises du Québec and pay the fees. It has been possible for a few years to produce this annual return on its own tax return, but without being able to make a change. If the information on the Registrar has changed, the company will need to perform an update. A federally incorporated enterprise is required to file an annual report with Corporations Canada, in addition to its annual return to the Registrar.
3. Updating the Minute Book
Finally, the company must also make sure to have a minute book and keep it up to date. The company must therefore host a meeting of its shareholders, at least annually. This obligation, unfortunately often forgotten or simply neglected, is essential not only to comply with legal obligations, but also to maintain the history of decisions and corporate changes. An incomplete minute book could cause you a lot of trouble, especially in the context of a restructuring or sale of the company or simply a shareholder transaction.
The directors are required to call an annual meeting of shareholders at which they must present the financial statements of the corporation to shareholders. They must also vote to constitute the Board of Directors and ensure that they confirm their decision not to appoint an auditor. If this is the case, their decision will not be valid until the meeting the following year.
As you can imagine, these obligations represent only the tip of the iceberg. Don’t forget about your obligations! Force-Légal Inc. recommends that you find out more about the legal requirements for corporations.