Our Dedicated Business Lawyers are Ready to Help You.
Allan Snelling LLP is the business law firm of choice for many of Kanata’s small and medium-sized families, technology and not-for-profit organizations. Over the years we have honed our skills and broadened our perspective to ensure our business clients benefit from competitive, high-quality, situation and task appropriate counsel and service.
COLLABORATIVE APPROACH TO YOUR BUSINESS ISSUES
Our business Lawyers approach—internally and with our clients—sets us apart. We take the time to develop a full understanding of a business’ history, mission, values, products, and services. Our Ottawa business Lawyers work to anticipate potential legal problems and to mitigate risk. We understand the collaborative nature of business, and that success is a great deal easier to achieve when your legal, tax and accounting advisors work closely with each other to achieve your goals.
Here are just a few of the business law transactions on which we advise:
- Franchise agreements
- Employee agreements and compensation
- Purchase and sale of businesses
- Reorganizations and restructurings
- Distribution and licensing agreements
- Shareholder and partnership agreements
- Medical, dental, and other professional incorporations
If you require representation or advice on current or pending business transactions contact us for a no obligation consultation with a business Lawyer in Ottawa.
Types Of Business Structures
In Ottawa, Canada, businesses are divided into four main structures: sole proprietorship, partnership, corporation, and cooperative.
A sole proprietorship is a business owned by one person. It is the simplest type of structure with few regulatory requirements. This type of structure does not provide any personal liability protection to its owner for debts or claims against the business.
Partnerships are formed when two or more individuals form an agreement to create a business and share in the profits and losses of that business. There are three common types of partnerships: general partnership, limited partnership, and joint venture. All partners have personal liability for the actions of each other partner unless otherwise noted in the agreement between them.
Corporations refer to a business that is owned and operated by shareholders. A corporation provides the owners with limited liability protection, meaning they are not personally liable for debts of the business. Owners can be individuals or other corporations.
Finally, cooperatives are businesses jointly owned by members who join to accomplish an agreed-upon goal such as providing services or products to their members at a lower cost than what is available in the regular market. The profits made by the cooperative are shared among its members according to how much they have used it.
These four structures form the basis of Ottawa's diverse and vibrant business landscape, allowing entrepreneurs and small-business owners alike to choose the structure that best meets their needs. With support from local government initiatives, Ottawa offers a business-friendly environment for entrepreneurs looking to take their business ideas to the next level.
Can An Ottawa Business Lawyer Help Me Set Up My Business Structure?
An Ottawa, Canada business attorney can be an asset when it comes to setting up the structure of your business. They can provide legal guidance on all aspects of incorporating or creating a partnership arrangement and will ensure compliance with local laws. They will ensure that you are properly registered with the correct government agencies, such as Revenue Canada and Industry Canada, and can also help in obtaining necessary permits and licenses.
Your attorney can help you create a business plan which outlines your goals for the company as well as how these objectives are to be achieved. This document is essential for any new venture and should include details about financing sources, target markets, pricing strategies, product development plans, marketing ideas, and operational strategy. An experienced attorney can also provide advice on structuring the business entity, such as whether it should be a corporation or partnership.
Your attorney can also guide you on matters related to employee contracts and benefits packages. They will help you understand the various options available for hiring employees, such as full-time versus part-time staff, and can assist in developing any necessary policies regarding wages, hours, and other employment concerns. Additionally, they can help negotiate benefit packages that are attractive to potential employees and ensure that these terms comply with local labor laws.
Lastly, your Ottawa business attorney can review all the paperwork associated with transactions like leases and sales agreements. This is important to ensure there are no hidden clauses that could be detrimental to your company in the future. They can also help you understand the various tax laws applicable to small businesses and can provide advice on ways to reduce your tax liability.
Business Law FAQs
Should I incorporate my existing business?
I am the sole proprietor of a profitable construction business that I want to expand. I’m nervous about the risk associated with the business and its expansion. Should I incorporate?
We would strongly recommend incorporation. Incorporation provides you with limited liability to protect your personal assets from creditors, and tax advantages that will help you grow your business and your wealth.
A corporation is a legal entity distinct from its shareholders. The obligations, debts and liabilities of the business are those of the corporation and not of its shareholders. The protection from creditors is a significant advantage, particularly for businesses that are inherently risky. As the sole proprietor you are currently liable for every debt, liability, obligation and claim against your business. In your construction business, an error or mistake by a sub-contractor, or simply the failure of the project caused by others, could result in huge liabilities for which you are personally exposed to creditors, risking loss of your house, savings and other assets. Incorporation of your business creates a significant barrier of protection. (Note: there are statutory and other limited exceptions to the protection provided by a corporation)
Active business income earned by a corporation is taxed at a much lower tax rate, approximately 15.5% in Ontario on income up to the small business limit of $500,000. This presents two wealth planning opportunities. Firstly, a growing business requires working capital. As a sole proprietorship, growing working capital is hard because profits are taxed at your personal marginal rate of taxation which may be more than 50%. By incorporating, you can grow your working capital, and thus expand your construction business, at a much faster rate because of the low rate of corporate tax. Secondly, by leaving profits in the Corporation more than your personal needs, you can grow your retirement savings in the corporation at a much faster rate. (In subsequent publications, we will talk about how to creditor-proof these savings).
A corporation provides for legal tax splitting with members of your family if they are made shareholders of your corporation. The shares of your corporation may be structured so that you remain in control of the corporation notwithstanding shares issued to family members.
Acquisition of a Business - Do such contracts affect the decision to acquire shares or assets?
I am considering the acquisition of a business. Long-term contracts between the business and third parties are important to the business. Do such contracts affect the decision to acquire shares or assets of the business?
There are several factors to be taken into account when purchasing an existing business including tax, liability, due diligence and employee matters. Your question relates to the contracts between the business and third parties. These contracts may include rights obtained by the business necessary to carry on the business, such as licenses or franchises, or the benefit of sale or service agreements for the supply of products or services that generate revenue for the business.
A fundamental difference between an asset purchase and a share purchase is that in an asset sale the contracts must be assigned (along with the transfer of assets) while in a share sale the contracts remain intact (since only the shares of the business itself are transferred). A comprehensive review of all important contracts is advisable as early as possible during the due diligence process to determine rights and obligations. If third party consents are required, consideration must be given as to the risk that such consents may not be available in a timely manner, or at all, and whether the transaction may be better structured to avoid the necessity for assignment. In some less common circumstances, there is an outright bar to assignment and consent cannot be obtained (this is the case in some government procurements). The acquisition of the business in such circumstances may only be achieved through a share sale to avoid termination of such contract(s). It should also be noted that some contracts contain provisions that deem a change of control from a sale of shares to be equivalent to assignment and triggering the necessity for third party consent.
Should a lawyer review your small business contracts?
I run a small business and I have several small contracts that I am currently in the process of negotiating. Are these worth bringing to a Lawyer for review?
Depending on the type of contract, there are several areas a Lawyer’s expertise can provide guidance, including contracts relating to employment or contractor relationships, borrowing and secured transactions, equipment leases, and other commercial agreements. Simply because a document is short, this does not mean there aren’t important clauses or terms that require careful consideration.
Contracts often contain important clauses relating to the limitation of liability, indemnification, and the waiver of important legal rights. Such clauses can have legal and financial implications for you or your business down the road. Understanding these implications is crucial and one of the services a Lawyer can provide.
A Lawyer can meet with you for a short consultation to review your contractual document and answer any questions you might have. By communicating to the Lawyer your expectations of the proposed contract, a Lawyer can work with you to achieve your goals as well as highlight and help you understand risks and liabilities that you or your business may be taking on as part of the contract.
If you have some questions about a contract and feel you may benefit from meeting with a Lawyer call and ask to set up a meeting.
What are the most common legal issues that businesses face?
One of the most common legal issues faced by businesses in Ottawa is intellectual property protection. Businesses need to ensure that their proprietary information, such as trademarks, copyrights, and patents, remains protected from misuse or infringement. Business owners must also be aware of the risks associated with using third-party materials without proper authorization. In addition, companies should have procedures in place to protect confidential information within their organizations.
Another issue that affects many businesses in Ottawa is employment law compliance. Companies are responsible for ensuring that their hiring practices comply with both federal and provincial laws. This includes making sure employees receive fair wages and benefits, understand health and safety regulations, and are not subjected to discrimination or harassment. Business owners need to stay up to date on the latest laws and regulations to keep their operations compliant.
Tax law is another important legal issue for Ottawa businesses. Businesses must ensure that they are accurately reporting their income and expenses, as well as filing taxes correctly and on time. Business owners must understand which taxes apply to their organization and how much they need to pay to remain compliant with tax law. Additionally, companies should be aware of potential deductions they may be eligible for to minimize their tax liability.
Finally, businesses need to be aware of contract law requirements when entering into agreements with other parties. Companies must ensure that all contracts are legally binding, clearly outline the rights and obligations of each party involved and protect their interests. Companies should also be aware of the provisions required by law when entering certain types of contracts such as employment or lease agreements.
By understanding the most common legal issues faced by Ottawa businesses, business owners can take steps to protect their organizations from potential liabilities. By staying informed and up to date on laws and regulations, companies can ensure that they remain compliant with current legal requirements. This can provide peace of mind for business owners in knowing that their operations are running smoothly and ethically.
What is the best business structure for my company?
In Ottawa Canada, several business structures can be beneficial for different types of businesses. For instance, a sole proprietorship is the simplest business form and consists of one person who is responsible for all aspects of the business such as managing operations, finances, and liabilities. This type of structure is ideal for freelancers or those offering services in their capacity.
For larger companies with multiple owners, a partnership may be more suitable. A partnership involves two or more people contributing funds to start up a business as co-owners and sharing profits and losses equally among themselves. The partners must agree on how decisions will be made and how each partner's role will contribute to the overall success of the company.
Corporations have a more complex business structure that requires registration with the government. This type of structure is suitable for large businesses that want to separate their assets from the company's assets and protects shareholders from potential lawsuits or liabilities. It also allows for taxation advantages and access to capital.
Finally, Limited Liability Companies (LLCs) are like corporations in that they offer owners limited liability protection but are easier to set up and less expensive than a corporation. An LLC combines aspects of ownership, management, taxation, and flexibility which can be beneficial for certain types of businesses in Ottawa Canada.
No matter what type of business structure you choose, it is important to make sure it aligns with your goals, objectives, and plans as a business owner. As such, it is essential to speak with an accountant or lawyer to ensure you choose the right option for your company.
By familiarizing yourself with the different types of business structures available in Ottawa Canada, you can make an informed decision about what will be most beneficial for your business. It is important to consider all aspects of each structure and consult professionals when needed so that your business can grow and succeed in the long term.
How can I protect my company's intellectual property?
One of the best ways for Ottawa businesses to protect their intellectual property is through trademarks. A trademark provides a business with an exclusive right to use, manufacture, or sell its goods and services under that mark. It also serves as a representation of quality control, distinguishing products from similar ones belonging to other businesses. To obtain a trademark registration in Canada, businesses must first apply for it at the Canadian Intellectual Property Office (CIPO).
The application process requires providing details about the type of product or service being trademarked and demonstrating how it differs from any existing marks registered with CIPO. Once approved, the trademark will remain valid for 10 years before renewal is necessary.
Another way that Ottawa businesses can protect their intellectual property is to create an effective internal security system. This includes measures such as restricting access to confidential information and documents, protecting trade secrets from unauthorized disclosure or use, keeping track of any proprietary technology used by the company, and regularly reviewing contracts with third-party service providers or vendors.
Additionally, Ottawa businesses can make sure that employees are educated on intellectual property laws, research any potential competitors’ activities before starting a new project, and register patents if necessary.
Overall, protecting one’s intellectual property is essential for Ottawa businesses to ensure their success. By applying for trademarks and creating an effective internal security system, they can ensure that their products and ideas remain safe from theft or misuse.
Furthermore, staying up to date on the latest intellectual property laws and regularly monitoring potential competitors’ activities can help businesses stay one step ahead of the competition. With these simple steps, Ottawa businesses can take control of their intellectual property and ensure its protection for years to come.
What should I include in a shareholder agreement?
An Ottawa business’s shareholder agreement should include all the important details of ownership, such as who owns what percentage and any restrictions on buying or selling shares. It should also outline how decisions are made within the business and how profits will be distributed among shareholders.
The agreement should also detail dispute resolution procedures in case of disagreements between shareholders, share transfer provisions, dividend payment policies, and voting rights to ensure everyone’s interests are taken into consideration. Finally, it should cover additional topics like indemnification and confidentiality of information.
Including these points in an Ottawa business’s shareholder agreement is essential for protecting the interests of all parties involved and ensuring alignment on key matters. Doing so can help prevent conflicts that could potentially affect the business’s operations.
Having a comprehensive agreement in place will help make sure that the business runs smoothly, and everyone is on the same page. With the right shareholder agreement, an Ottawa business can ensure its success now and in the future.
In addition to these key components, shareholders need to have access to legal advice when drafting their agreement. This way, they can be certain that their rights are protected, and all relevant details are included in the document.
Consulting with professionals also helps avoid any potential ambiguities which could cause problems down the line. By having an expert review their shareholder agreement, Ottawa businesses can be confident that all parties involved have agreed to terms that best serve their interests.
With careful consideration and the right advice, an Ottawa business can create a shareholder agreement that ensures everyone’s rights are protected and upholds its operations. Doing so will help ensure their success now and in the future.
It is also important for businesses to review their agreements regularly to make sure that they remain up to date with any changes in regulations or conditions. This includes verifying whether the individual shareholders’ interests have shifted over time. All parties involved should be notified of any alterations made to the agreement so that everyone is on the same page and in agreement with what has been set out.
How do I resolve a dispute with a customer or supplier?
If a business in Ottawa finds itself in the middle of a dispute with a customer or supplier, it should take some essential steps to resolve it amicably.
First and foremost, businesses must try to be clear and open in their communication with both parties. They need to document all communications so that evidence can be provided in the event of an escalated situation. If conversations become heated, either party should step away from the conversation and cool off before continuing. This will help to avoid any misunderstandings or misinterpretations.
Another option for resolving disputes is through negotiation. Businesses should look at both sides of the issue objectively and brainstorm possible solutions together. This can often bring about compromises that will be beneficial for both parties.
It is also possible to work with a mediator to help resolve the dispute. This can be done through an Ottawa-based business dispute resolution service that specializes in this type of negotiation. They can provide guidance and support as well as tools to facilitate the process.
Finally, businesses should always keep their legal options open and consider taking their case to court if they cannot otherwise resolve the issue. It’s important to remember though that not all disputes require legal action; many can be resolved amicably through communication and negotiation. With these steps, an Ottawa business should be able to successfully resolve any dispute with a customer or supplier.
What are the legal requirements for terminating an employee?
It is important to follow legal requirements for terminating an employee in Ottawa, Canada. Before termination, employers must provide employees with notice or pay instead of notice. The notice must be provided in writing and may include a severance package if applicable.
Employees are entitled to receive at least one week of notice per year of employment served up to a maximum of 8 weeks after 3 years or more. If the employee has been employed for less than 3 years, their notice period should be pro-rated.
Employers must also consider any other contractual obligations such as bonus payments or commissions that may need to be paid out upon termination, as well as vacation entitlements carried over from previous holiday periods. Employers can opt instead to offer payment in place of notice, which is the equivalent amount to what their employee would have earned during the notice period.
In addition to providing proper notice or pay in lieu, employers must also ensure that they provide sufficient documentation of the termination. This includes a letter of termination detailing the conditions of severance and any other applicable information such as final pay cheques and unused vacation days. Employers must also keep records of all relevant documents related to termination for at least three years following the date of dismissal.
Finally, employers should be sure to consider any potential legal implications when terminating an employee in Ottawa. Most importantly, employers cannot discriminate against employees due to race, gender, age, or disability according to Canadian Human Rights law and may face consequences for doing so.
If an employee believes they have been wrongfully terminated, they may file a complaint with the Canadian Human Rights Commission or seek legal action. It is important to understand and follow all legal requirements when terminating an employee in Ottawa to avoid any potential legal issues.
By adhering to these legal requirements, employers can ensure that they are providing their employees with fair treatment during termination proceedings. Employers must know the proper steps to take when terminating an employee in Ottawa, Canada, and understand the implications of not complying with these laws. Overall, following these procedures will allow employers to terminate employees in a way that is both legally compliant and respectful of their rights as workers.
How can I protect myself from personal liability as a business owner?
Business owners in Ottawa can take steps to protect themselves from personal liability by following good record-keeping practices and instituting corporate formalities. This includes properly setting up the company, filing all necessary paperwork with the Canadian government, maintaining records of financial transactions, and adhering to the laws of Canada.
The first step any business owner should take is to ensure they are setting up their company correctly. This means examining the various types of legal structures available for a business in Canada and selecting one that best suits the needs of their venture. There are different tax implications associated with each type of legal structure, so business owners needs to understand how their chosen structure will affect them financially before making a final decision.
The next step is to register the business with the Canadian government. This requires filing certain forms and documents that provide information about the company, such as its name, address, type of business activities it will undertake, and any other relevant details. Additionally, many provinces have specific requirements for businesses operating within their borders. Business owners should familiarize themselves with these regulations to remain compliant.
Good record-keeping practices are essential for protecting a business owner from personal liability. It's important to document all financial transactions and keep accurate records of any income or expenses associated with the business. All paperwork related to taxes should be filed properly so that there are no issues when it comes time to file returns each year. Additionally, invoices should be issued for any services or products sold to customers so that payments can be tracked.
Finally, business owners need to stay abreast of laws and regulations related to their industry. Depending on the type of company they have established, there may be specific rules and guidelines that must be followed to remain compliant. Failing to observe these laws could result in legal action being taken against the business, which could put its owner at risk of personal liability.
I am a practicing family physician with two young children. My accountant mentioned the idea of incorporating my practice into a professional corporation. How does this work?
As a physician, you are generally permitted to create a physician corporation. The Ontario Business Corporations Act (OBCA) and the Regulated Health Professions Act govern physician corporations. Once incorporated, a Certificate of Authorization from the College of Physicians and Surgeons of Ontario (CPSO) is required for your professional corporation to practice medicine in Ontario.
There may be significant benefits to incorporation arising from income splitting through the payment of dividends to adult shareholders and the deferral of tax through retention of excess cash and investing in the corporation.
A professional corporation carries on the practice of medicine with you as both a shareholder and employee of your corporation. It is important to note that under the provisions of the OBCA, a professional corporation does not shield the shareholders from professional liability as acts of a professional corporation are deemed to be acts of the shareholders. Non-voting shareholders who are not members of the CPSO are exempted from any professional liability.
All voting shares of the corporation must be held by a member of the CPSO. Non-voting shares can be held by a parent, spouse or child (and minor children must have their shares held in trust). Professional corporations are only permitted to carry on the practice of the profession or activities that are related to or ancillary to the profession. Furthermore, a professional corporation is permitted to invest its surplus funds in passive investments.
A Lawyer with experience in incorporating professionals can help you set up your professional corporation such that your objectives may be realized.
My friend and I have an idea for a business and we are considering forming a partnership. How does a partnership work and how should one be setup?
Whether or not a partnership exists is a fundamentally a legal question. Ontario’s Partnerships Act says that a relationship between “persons carrying on a business in common with a view to profit” is a partnership within the meaning of the Act. This is important because it means that whether or not you declare yourself to be a partnership, legally speaking, you might be a partnership anyways, whether you intended to or not.
A partnership can exist between you and your friend personally, or even as between two corporations controlled by each of you. Unlike a corporation, however, a partnership has no separate legal existence from the partners themselves and each partner has the power to bind the partnership and each partner is jointly liable for any obligations incurred on behalf of the firm. This is why, when deciding to form a partnership, a partnership agreement can be very practical.
A partnership agreement sets out the rights and obligations for partners in the partnership and provides for what should happen in circumstances of partnership incapacity, retirement or death. Without one, the Partnerships Act will provide for what happens to the partnership in these circumstances, often with unintended results. A partnership agreement can also provide mechanisms for the distribution of partnership income and a process for bringing additional persons into the partnership. Creating a partnership agreement that meets your goals with the help of a commercial Lawyer ensures that your partnership will continue in a manner of your design.
I am considering the acquisition of a business. Long term contracts between the business and third parties are important to the business. Do such contracts affect the decision to acquire shares or assets of the business?
There are a number of factors to be taken into account when purchasing an existing business including tax, liability, due diligence and employee matters. Your question relates to the contracts between the business and third parties. These contracts may include rights obtained by the business necessary to carry on the business, such as licenses or franchises, or the benefit of sale or service agreements for the supply of products or services that generate revenue for the business.
A fundamental difference between an asset purchase and a share purchase is that in an asset sale the contracts must be assigned (along with the transfer of assets) while in a share sale the contracts remain intact (since only the shares of the business itself are transferred).A comprehensive review of all important contracts is advisable as early as possible during the due diligence process to determine rights and obligations. If third party consents are required, consideration must be given as to the risk that such consents may not be available in a timely manner, or at all, and whether the transaction may be better structured to avoid the necessity for assignment. In some less common circumstances there is an outright bar to assignment and consents cannot be obtained (this is the case in some government procurements). The acquisition of the business in such circumstances may only be achieved through a share sale to avoid termination of such contract(s). It should also be noted that some contracts contain provisions that deem a change of control from a sale of shares to be equivalent to assignment, and triggering the necessity for third party consent.