Let us help you start your business in Québec!
Are you thinking of starting your own business? We know that opening a business can be a big undertaking.
That’s why Menneh Legal is here to help!
Any great business starts with an idea. It is important to research the industry you are looking to immerse yourself in to map out potential competitors and to understand the finances required.
Many budding entrepreneurs like yourself, understand that there is effort involved in starting a business and realize the importance of planning for a successful launch. However, many entrepreneurs might not be familiar with the technical steps required to launch their business venture. At Menneh Legal, we take on the process of creating your business entity and discuss with you the steps involved to help you reach your entrepreneurial aspirations !
Depending on your selected business model, the process of opening a business in Québec may require several steps such as :
- registering your business with the Registraire des entreprises
- registering your business in compliance with Revenu Québec requirements
- complying with other administrative formalities
1. Choose your legal form
In Québec, enterprises have the option of operating under various types of legal forms. The following legal models briefly describe some of the most common business models.
This form of enterprise is owned and operated by one person and is often used by a “self-employed person”. This type of business model may be useful for a natural person that essentially works for him or herself.
Consequently, this person is the sole proprietor and all of the profits and potential losses incurred are borne to that person. This enterprise has no legal existence, no juridical personality and does not have separate patrimony from the sole proprietor.
In choosing the form of a business corporation, the company will be constituted under the Business Corporations Act. A business corporation operates for the central purpose of generating profit to be distributed to its shareholders. This type of business model creates a separate legal entity, creates a separate patrimony and owns property in its business name.
In addition, this legal form provides the entity with specific rights and obligations as the business assumes liabilities and binds itself to contracts through the intermediary of the corporation’s directors. Also, a corporation can sue a third party and can be sued in a civil action.
A general partnership is a business created through a “partnership agreement” and is designated under a single name for all the partners.
This form of business model consists of a group of persons that carry on a common activity in cooperation with one another. Each partner involved contributes to the business, shares the business property, participates in business activities and shares the profits.
All partners involved are responsible for any potential pecuniary losses as they are solidarily liable for the enterprise’s obligations and debts, regardless of the respective shares of each partner in the partnership. Moreover, a general partnership may sue and be sued in a civil action.
A limited partnership is a business created through a “partnership agreement” and is designated under a single name for all the partners.
Such limited partnership is a partnership that contains two categories of partners that have different roles within the business. This business model consists of one or more general partners and one or more limited partners. The general partners contribute to the enterprise through their work, experience, expertise and are solely authorized to administer and represent the enterprise throughout its business activities. Such general partners are also solidarily liable for the partnership’s debts.
On the other hand, limited partners contribute to the common stock of the partnership by providing money or property to the business. The limited partners are liable for the partnership’s debts but only up to the amount of their contribution.
The limited partnership may sue and be sued in a civil action.
This business model is created through a contract which may be written or verbal or may arise from facts that illustrate a specific intention to form a joint venture.
A joint venture is essentially a business model that takes form as an “undeclared partnership”. Therefore, all Québec general partnerships and limited partnerships that are not registered are considered as joint ventures.
This type of partnership does not qualify as a legal person and consists of partners that act in their own name on behalf of all partners.
Trust that operates a commercial enterprise
This type of business model allows a trust to operate a commercial enterprise in order to turn a profit, as the trust is established in favour of a beneficiary. It is this beneficiary who in turn reaps such profits generated. The trustee in place administers the property of the trust as such trustee has a similar mission as that of an administrator of a business corporation.
Some examples of trusts that operate a commercial enterprise include a business trusts, investment trusts and real estate investment trusts.
The entity form of an association consists of a group of persons that have joined together to pursue a common goal, other than the goal of making profits to be shared amongst each other. An association may make pecuniary profits, however, they are not to be shared among the members.
The principal activities that an association is designed to promote include the study and the development of the economic, social or moral interests of its members.
2. Registering with the Registraire des Enterprises
In Québec, the majority of enterprises are required to register with the Registraire des enterprises which is done by filing a declaration of registration. The purpose of such registration is to collect information about enterprises doing business in Québec. At the time of registration, the Registraire des entreprises will assign a Québec business number (NEQ) to the enterprise.
The following are some enterprises that must file a declaration of registration:
- natural persons who operate a sole proprietorship in Québec, under a name that does not include their first and last name
- general partnerships constituted in Québec
- limited partnerships constituted in Québec
- partnerships not constituted in Québec that carry on an activity in Québec or that possess an immovable real right in Québec
- legal persons not constituted in Québec that maintain their domicile in Québec, carry on an activity in Québec or possess an immovable real right in Québec
- legal persons constituted under a law other than the Québec law and maintain a domicile in Québec, carry on an activity in Québec or possess an immovable real right in Québec.
3. Registering with Revenu Québec
Depending on the income your business is expected to generate, it may also need to meet the formality of registering with Revenu Quebec. If the business you would like to launch is expected to generate an income and the income of your associates does not exceed $30 000, your business will be considered as a “small supplier”. Therefore, if the total taxable supplies in a calendar quarter or in the four preceding calendar quarters do not exceed $30 000 your business need not register for or collect the GST and the QST.
On the other hand, if your upcoming business is expected to generate income and such business income of your associates will exceed $30 000, your business will be required to register for the GST/HST and QST.
Furthermore, other taxes may also apply to your business depending on the legal form and nature of your business activities. Some possible taxes include:
- sources deductions
- corporation income tax
- consumption taxes such as; GST-HST and QST, tax specific to alcoholic beverages, tax specific to insurance premiums, etc.
4. Other formalities
As well, your business may also need to meet further formalities, such as requiring the issuance of a permit, a licence, decals or a registration certificate according to the type of business operations you are expecting to launch.
If starting a business has been something on your mind, then wait no longer!
Menneh Legal is here to help get your business started!