Incorporate Your Business In New Brunswick

How to Incorporate a Business in New Brunswick, Canada

Incorporating a business in New Brunswick, Canada, offers several benefits, including limited liability for owners and easier ownership transfers. However, it also comes with certain drawbacks, such as higher costs and more complex annual procedures. This guide will provide an introduction to the process of incorporating a business in New Brunswick, outlining the steps, requirements, and considerations for entrepreneurs looking to establish their ventures in the province.

Choosing a business structure

When starting a business in New Brunswick, Canada, there are several business structures to choose from. The type of business structure you choose will determine the fees and documents required for the registration process. Here are the four main types of business structures available in New Brunswick:

• Sole Proprietorship: This is a business structure designed for a single person. It is not always compulsory to register a sole proprietorship if you are using your own name as the business name. However, if you intend to add an annex to your name, you must register the business. Sole proprietorships have lower registration costs and fewer regulations to follow, but they do not provide the same level of protection as other structures in terms of separating the owner's personal liability from the business.
• Partnership: This type of business structure is suitable for two or more people or companies working together. There are different types of partnerships available, including general partnerships, limited partnerships, and limited liability partnerships. Like sole proprietorships, partnerships have lower registration costs and fewer regulations. However, they also have limited liability protection for their owners.
• Corporation: A corporation is a business structure that provides a legal separation between the owners and the business financially and in terms of liability. This means that owners have limited financial liability if problems arise. Corporations can have one owner or multiple owners, and shares can be sold publicly on stock exchanges or held privately by the owners. While incorporating a corporation has several benefits, it also comes with higher startup costs, more complex annual tax returns, and additional reporting requirements.
• Non-profit: This business structure is suitable for non-profit organisations.

When choosing a business structure, it is important to consider the advantages and disadvantages of each type, as well as the specific requirements and complexities of your business. For example, if your business has a simple structure and you are the sole owner, a sole proprietorship or partnership may be a suitable option. On the other hand, if you have multiple owners and want to limit your personal liability, incorporating a corporation may be a better choice. Additionally, if your business has a complex structure and involves diverse interests, seeking advice from a corporate lawyer is recommended to ensure you select the most appropriate business structure and comply with all legal requirements.

Selecting a business name

Choosing a name for your business is an important step in the process of incorporating your business in New Brunswick, Canada. Here are some key considerations and guidelines to help you select a suitable name:

Understanding the Business Structure

Before selecting a business name, it is essential to determine the type of business structure you will have. In New Brunswick, you can choose from four forms of business structures: sole proprietorship, partnership, non-profit, or corporation. Each structure has different requirements, advantages, and disadvantages, so it's important to understand these before proceeding.

Selecting a Unique Name

It is crucial to choose a unique name for your business to avoid legal issues and confusion. The New Brunswick government requires pre-clearance of the chosen name to ensure it is not identical or deceptively similar to any other registered business name in the province and possibly across Canada. Conduct a thorough name search to confirm the availability of your desired name. Service New Brunswick provides guidelines to assist you in choosing a workable business name.

Descriptive and Memorable Name

Consider selecting a name that describes the products or services your business offers. A descriptive name can help customers understand what your business is about and make it more memorable. For example, choosing a name like "Jane Doe Consulting" clearly indicates the nature of the business.

Distinctiveness and Memorability

Opt for a distinctive name that will set your business apart from others. A unique and memorable name can make it easier for customers to identify and remember your business. Avoid names that are too generic or similar to existing businesses in your industry.

Compliance with Regulations

When choosing a business name, it is essential to comply with the relevant Acts and Regulations of the Province of New Brunswick. Sole proprietorships in New Brunswick are governed by the Partnerships and Business Names Registration Act. This Act emphasizes prohibiting the registration of names that are identical or deceptively similar to existing registered names to prevent public confusion and inconvenience.

Reservation and Registration

Once you have selected a unique and suitable name, you will need to reserve it by paying a fee to secure all legal rights to the name. After that, you must complete the business name registration forms, including the NB Certificate of Business Name and the Additional Information Form. Submit these forms to the Corporate Affairs Branch of Service New Brunswick.

Trade Name Registration

If you plan to use a trade name or operating name that is different from your legal business name, ensure you register it separately. Failing to register a trade name can result in significant fines and legal consequences. The registration of trade names is handled by the respective provinces or territories.

Trademark Registration (Optional)

Consider registering a trademark to further protect your brand and intellectual property. Trademark registration provides exclusive rights across Canada for 15 years and can be renewed indefinitely. It also enables you to take legal action in case of infringement and explore licensing opportunities.

Understanding the registration process

The registration process for incorporating a business in New Brunswick involves several steps, and it's important to understand the applicable rules and requirements. Here's a detailed breakdown of the registration process:

• Select a business structure: In New Brunswick, there are four types of businesses that can be registered: sole proprietorship, partnership, non-profit, or corporation. Each structure has its own advantages, disadvantages, and requirements, so it's important to choose the one that best suits your business needs.
• Name your business: Choose a distinctive, descriptive, and legal name for your business. The name should not be misleading or similar to existing names used by other organisations or businesses. It must end with one of the following: Limited, Limitée, Incorporated, Incorporée, Corporation, Ltd., Ltée, Inc., or Corp. You can also opt for a numbered corporation, which speeds up the process and allows for immediate delivery of the Articles of Incorporation.
• Conduct a name search: Perform a New Brunswick NUANS (New Upgraded Automated Name Search) Report to ensure your proposed business name is unique and not already in use by another corporation. This helps prevent potential lawsuits and objections from other corporations.
• Prepare the required documents: You will need to submit several documents as part of the registration process, including the Articles of Incorporation, Notice of Registered Office, and Notice of Directors. The Articles of Incorporation should include information such as the proposed corporate name, share structure, restrictions on share transfers, number of directors, and any business activity restrictions. The Notice of Registered Office should include the address of the registered office of the business, and the Notice of Directors must include the names, addresses, and other details of the directors.
• Submit the documents and pay the fees: Submit the completed documents electronically to the Corporate Registry, along with the required fees. The incorporation fee for New Brunswick is $262 for e-filing only. There may be additional fees for other services, such as a name search report, which costs $30.
• Processing and approval: The New Brunswick Corporate Registry Office will review your application and ensure that all documents are properly completed and that the proposed name is acceptable. If your application is complete and meets all the requirements, it will be approved, and you will receive notification of your newly incorporated business.

It's important to note that you may also seek the assistance of a corporate lawyer or use online incorporation services to guide you through the registration process, especially if your business structure is complex. Additionally, while there is no deadline for incorporating your business, you will not receive the benefits of incorporation until your registration is accepted by the provincial government.

Knowing the costs

The costs of incorporating a business in New Brunswick, Canada, can vary depending on the method of filing and the complexity of the business structure. Here is a detailed breakdown of the costs involved:

Government Fees

The New Brunswick government charges a fee of $262 for incorporating a business in the province. This fee applies to e-filing only and is paid directly to Service New Brunswick, the provincial government body that handles business registrations. This fee is a mandatory cost for all businesses wishing to incorporate in New Brunswick.

Electronic Filing Fee

In addition to the government fee, there may be an electronic filing fee of $99. This fee is associated with submitting the incorporation documents electronically. It is important to note that the electronic filing fee may vary depending on the service provider or the package chosen.

Name Search Report

Before incorporating, you must conduct a name search to ensure your chosen business name is available. This search typically costs $30 and can be obtained through a NUANS (New Upgraded Automated Name Search) search report. The NUANS report is valid for 90 days, and you must complete the incorporation process within this timeframe.

Annual Return Filing

Once your business is incorporated, there is an ongoing cost of $60 to file your annual return through Service New Brunswick. This fee is paid annually and is required to maintain your business's good standing with the provincial government.

Legal Fees

Incorporating a business can be a complex process, and you may need to seek legal advice or hire a corporate lawyer to assist you. Legal fees can vary depending on the lawyer's expertise and the complexity of your business structure. It is recommended to consult with multiple lawyers to compare rates and find one that suits your budget and needs.

Third-Party Services

If you choose to use a third-party service provider to assist with the incorporation process, you will incur additional fees. These fees can vary depending on the service provider and the services included in their packages. For example, Company Formations charges an extra $129 for their services. It is essential to research multiple providers and compare their fees and services offered to find the best fit for your business.

Federal Registration

If you plan to operate your business outside of New Brunswick or want protection for your business name across Canada, you must register with the federal government. Federal registration incurs additional fees, and you will still need to register separately with the province of New Brunswick.

In summary, the costs of incorporating a business in New Brunswick include government fees, filing fees, name search reports, annual return filings, legal fees, and potential third-party service provider costs. It is important to consider your business needs and budget when deciding how to incorporate and which services to utilise.

Advantages and disadvantages of incorporating

Advantages of Incorporating a Business in New Brunswick, Canada:

• Protection for owners' personal assets: Because a corporation is a separate legal entity from its owners, there is a layer of protection from personal liability associated with claims made against the business. If there is a problem with the business, the owner's personal assets are protected.
• Tax advantages: Incorporation of a business may lead to tax benefits. A sole proprietor must declare all of the business's profits as income when filing taxes. In contrast, incorporation allows for some funds to be left in the business, and these funds are taxed at corporate tax rates, which are often lower than personal tax rates.
• Business continuity: As a separate entity, the operations of a corporation are less affected by owner and/or shareholder turnover. The business itself has an unlimited lifespan, increasing its likelihood of success over time as changes in ownership occur.
• Increased credibility: Incorporation brings a perceived increase in credibility for the business and its owners/shareholders, which may lead to more granting, funding, and investment opportunities.
• Easier ownership transfer: As owners do not directly own the corporation's assets, they instead own shares in the corporation, which owns the assets. This makes transferring ownership interests much easier.
• Improved access to capital and grants: The Canadian government offers loan and grant programs that are only available to incorporated businesses.

Disadvantages of Incorporating a Business in New Brunswick, Canada:

• Increased administrative load: Incorporation comes with additional administrative work, including annual filings, development and maintenance of bylaws, registration of directors, officers, and owners/shareholders, and record-keeping of meetings. This increases costs for the business in terms of both money and time.
• Added costs: As a more complex legal entity, a corporation incurs more costs at the time of incorporation and increased ongoing accounting and legal expenses.
• No personal claim of losses: In a sole proprietorship or partnership, if the business incurs a loss, the owner may be able to claim those losses against their personal income. When a corporation incurs a loss, it must remain with the business and cannot be used on personal tax filings.
• Legal help required: You will likely need to hire an attorney to help with the incorporation process and adhering to the Business Corporations Act.
• Extra work annually: Corporations must file an annual business tax return, which can be more complex than other legal business structures. Additionally, an annual report about the corporation's activities during the year must be submitted.

Frequently asked questions