Do I Need A Lawyer To Incorporate My Real Estate Business?

Every single one of these organizational resolutions are legally required, and can only be done by a lawyer. Without step two, your business is not incorporated and risks dissolution.

The second step needs to be completed during a specific period of time or your business may be dissolved, leaving you scrambling to carry out the second step yourself. Rectifying the dissolution can be needlessly time-consuming and expensive, and you will have to start all over again. The common-sense
approach is to just consult a lawyer from the very beginning. This will give you the satisfaction and assurance that a capable professional is handling your affairs. You will be at peace knowing that the future of your business is in good hands. Best of all, a lawyer can also handle other legal issues, such as contracts, Privacy Agreements and Terms and Conditions, trademarks, licences and permits, and tax planning.

However, hiring a lawyer to incorporate your business comes with both pros and cons. Keep reading to discover if hiring a lawyer to incorporate your business is the right move for you.

What are the pros of hiring a lawyer to incorporate your business?

Tax benefits
Ontario’s real estate professionals are now allowed to incorporate businesses by setting up a Personal Real Estate Corporation (PREC). Business owners can take advantage of the tax savings and deferrals obtained by setting up a PREC.

Non-voting shareholders for tax purposes

When incorporating a company, an experienced lawyer will consider the business owner’s short-term and long-term goals and will account for them. A common example is where a business owner wants to someday pay out some of the company’s profits to shareholders without giving them any decision-making power. A lawyer will plan for this, allowing the corporation to make those payments and potentially issue separate classes of shares.

Invest via the Personal Real Estate Corporation (PREC)
Your lawyer will be able to help you invest excess cash in income- producing assets. Should you
decide to invest in real estate, incorporation will allow you to more effectively structure your real
estate holdings.

What are the cons of hiring a lawyer to incorporate your business?

Accounting and legal expense
Of course, a lawyer is going to cost you. But, the amount that you will save in tax advantages (and avoiding future fees from your mistakes) will be substantially more.

No shield of liability
Having a lawyer incorporating the business does not protect your company from liability. You can still
be sued by clients or others. Of course, having a lawyer on board will help you future-proof your business and help you avoid being put in situations of liability.

Cannot advertise to the public
The corporation cannot be known by the public, and so you cannot advertise the corporation to the public. You would have to advertise under a different name.

Incorporating your business involves a two-step process.

Step One: Articles of incorporation are prepared, filed and issued with the Ministry.

Step Two: Organizational resolutions, which organize the new corporation and issue shares to the shareholders, are prepared. Since articles of incorporation are generally provided to the public for free,
you can actually do step one yourself quite easily, and save a ton of money in the process. Step two, on the other hand, can only be done by lawyers. This includes electing directors, appointing officers and issuing shares to shareholders. Organizational resolutions are also prepared, including:

– Appointing the directors and officer.

– Issuing share certificates to shareholders, specifying the number of their shareholdings, class of shares, and percentage of ownership.

– Confirming fiscal year-end, corporation’s bank, accountant and solicitor.

– Providing consent to exempt itself from the requirement to prepare audited financial statements.

– Indemnifying directors and officers.

– Obtaining an official minute book that houses all of the corporate records.

http://RealEstateLawyers.ca LLP makes real estate transactions simple as well as properly incorporating your business. To learn more about http://RealEstateLawyers.ca LLP

visit http://www.RealEstateLawyers.ca or call us toll-free at 1 (855) 466-3801.