Too often, entrepreneurs enter into leases without realizing the risks hidden in the fine print. From costly rent escalations to unexpected repair obligations, the terms you agree to today can have lasting impacts on your business — and, in some cases, your personal assets.

This guide explains why commercial leases demand extra caution, highlights the provisions that deserve close review, and shows how a thoughtful lease negotiation can help set your business up for success.

Why Commercial Leases Aren’t Like Residential Rentals

It’s tempting to think of a commercial lease as just a bigger, more formal version of a residential rental. In reality, they are far more complex and carry higher stakes. Unlike residential tenants, commercial tenants have limited statutory protections — which means the contract itself is your primary safeguard.

Key differences include:

• Length & Complexity – Commercial leases often run 3–10 years and can exceed 30 pages, with detailed terms that carry significant financial consequences.
• Built-In Cost Increases – Rent escalations may be tied to inflation, market trends, or fixed annual percentages — compounding your costs over time.
• Tenant Responsibilities – Commercial tenants are commonly responsible for repairs, maintenance, improvements, and sometimes even capital expenditures.
• Reduced Legal Safeguards – Residential tenants have broad statutory protections; commercial tenants must negotiate their own protections.

The takeaway: Residential leases are designed to protect tenants. Commercial leases are designed to protect landlords — unless you negotiate otherwise.

The Offer to Lease: Where Many Tenants Go Wrong

For many entrepreneurs, the first step in the leasing process is signing an Offer to Lease. At first glance, it looks like a harmless outline of rent, square footage, and lease length. In reality, it can bind you to the landlord’s standard lease — often before you’ve had the chance to review it.

Practical tip: Always review the full lease agreement with a lawyer before signing an Offer to Lease. This preserves your negotiating leverage and prevents unpleasant surprises later.

14 Critical Clauses Every Business Owner Should Review

While no two leases are identical, some clauses consistently carry the greatest financial and operational impact. Here’s what to look for:

Financial Terms

• Lease Term & Renewal Rights – Confirm dates and renewal options; without them, you risk losing your location just as your business takes off.
• Rent Structure & Escalations – Review how and when rent increases apply; even modest escalations add up significantly over time.
• Operating Costs (Additional Rent) – Taxes, insurance, and maintenance can sometimes exceed your base rent. Look for caps and clear estimates.
• Security Deposits – Understand the amount, purpose, and refund conditions.
  
  

Operational Clauses

• Lease Type – Gross (all-in), net (base rent plus expenses), or percentage (base rent plus a share of sales).
• Maintenance & Repairs – Define who handles what — from routine upkeep to major structural repairs.
• Pre-Possession Work – Clearly document landlord and tenant responsibilities, deadlines, and remedies for delays.

Business Protection Terms

• Assignment & Subleasing – Flexibility here can be crucial if you need to relocate or adjust your operations.
• Parking – Ensure you have enough spaces for staff and customers, with clear terms and costs.
• Insurance – Confirm requirements are both reasonable and obtainable.
• Default & Remedies – Know what constitutes a default, the penalties, and whether they could trigger personal liability.
• Competition & Exclusivity – These can protect your business from competitors, but must be carefully worded to avoid limiting your growth.
• Right of First Refusal – Grants you the opportunity to purchase the property if the landlord sells.
• Personal Guarantees – Understand the risks before tying your personal assets to business obligations.

Beyond the Lease: Location & Budget

Your lease is only one part of the decision. Where your business is located and the hidden costs attached to that location are equally important.

• Accessibility – Is the site convenient for both customers and suppliers?
• Visibility & Foot Traffic – High-visibility locations can save thousands in marketing costs.
• True Cost of Occupancy – Beyond rent, factor in utilities, insurance, taxes, maintenance, deposits, and infrastructure needs.

Negotiating Your Lease: What’s Possible

Almost every clause in a commercial lease is negotiable. Common areas to improve include:

• Caps on Rent Increases – To keep costs predictable.
• Tenant Improvement Allowances – Landlord contributions to help offset build-out costs.
• Exit Options – Early termination rights in case circumstances change.
• Repair & Maintenance Limits – Ensure you’re not responsible for expensive capital repairs.

A strong negotiation can transform an onerous lease into one that supports your growth.

Why a Lease Review Matters

Even a modest commercial lease can involve substantial commitments. A legal review ensures you:

• Spot one-sided or costly terms before signing
• Understand your rights and obligations in plain language
• Prevent disputes through clear, enforceable terms
• Strengthen your negotiating position
• Protect both your business and your personal assets

Bottom line: Reviewing your lease now can save you money, stress, and potential liability later.

How Main Street Law Can Help You Secure the Right Lease

At Main Street Law, we’re committed to helping Alberta business owners protect their investments and operate with confidence. Whether you’re leasing your first space or renegotiating an existing agreement, we provide clear, practical guidance every step of the way.

We can help you:

• Review and explain your commercial lease terms
• Identify and address clauses that could increase your costs or limit your flexibility
• Negotiate terms that better protect your business
• Ensure your lease aligns with your long-term goals and growth plans

Contact us today at 780-960-8100 or visit mainstreetlaw.ca/business-law-lawyer to schedule your consultation.

Make your next business move with a lease that works for you — not against you.

The post Your Commercial Lease Could Make or Break Your Business: What Alberta Entrepreneurs Need to Know appeared first on Main Street Law Llp.

Starting a business is one of life’s most exciting ventures. But beyond the passion and planning, there are important legal decisions to make—decisions that can impact your taxes, liability, and long-term success. At Main Street Law, business owners often ask us about the best way to set up their company. Should they incorporate, or simply register a trade name?

While both options allow you to operate a business in Alberta, they come with very different legal and financial implications. Knowing the distinction can help you protect yourself, plan for growth, and avoid costly mistakes down the road.

Registering a Trade Name

Registering a trade name is the process of officially declaring your business name and operations with the provincial government. It’s a common choice for entrepreneurs starting out as sole proprietors or partners.

Why business owners choose this option:

• Simple and affordable: It’s the quickest and least expensive way to get started.
• Low maintenance: Minimal paperwork and reporting requirements make it easy to manage.
• Great for testing ideas: Perfect for trying out a business concept, running a side hustle, or keeping operations local.

Things to keep in mind:

• No separation from personal assets: You and your business are considered one and the same, which means business debts and obligations are also personal.
• Unlimited personal liability: If your business is sued or can’t pay its debts, your home, savings, and other assets could be at risk.
• Limited name protection: Trade name registration only applies in Alberta, lasts for five years, and must be renewed. Other businesses in Canada may still be able to use a similar name.
• Perception matters: Some banks, investors, and clients may view sole proprietorships and partnerships as less formal or stable than incorporated companies.

Incorporating a Business

Incorporation is more than just filing paperwork—it creates a separate legal entity. This means the corporation itself can own property, sign contracts, and take on liabilities. For many entrepreneurs, this structure provides an added layer of protection and a stronger foundation for growth.

Why many business owners choose to incorporate:

• Limited liability: Shareholders are generally not personally responsible for corporate debts, so your personal assets are better protected.
• Tax advantages: Corporations may access lower tax rates and planning strategies such as income splitting or deferring taxes.
• Name protection: Federal incorporation secures your business name across Canada, while provincial incorporation protects it within Alberta.
• Credibility and growth potential: Being incorporated often enhances your reputation with lenders, investors, and clients, and can make expansion easier.
• Perpetual existence: Unlike sole proprietorships, corporations continue even when ownership changes—making it easier to sell or pass on to the next generation.

Important considerations before incorporating:

• Higher costs and complexity: Incorporation comes with upfront legal and accounting fees, annual filings, and corporate record-keeping.
• Ongoing compliance: Corporations must maintain a minute book, file annual returns, and follow governance rules.
• Residency requirements: For federal corporations, at least 25% of directors must be Canadian citizens or permanent residents.

How to Decide What’s Right for You

Deciding whether to register a trade name or incorporate comes down to your goals, risk tolerance, and long-term plans. A few key questions can help guide the decision:

• What are my liability risks?
  In higher-risk industries like construction, food services, or professional services, incorporation offers added protection by separating personal and business liabilities.
• Am I planning to grow?
  If the goal is to scale, raise capital, or expand beyond Alberta, incorporation provides the structure and credibility needed to support that growth.
• What is my budget?
  Registering a trade name is less costly to start, but incorporation may provide long-term financial advantages through lower tax rates and planning opportunities.
• How long do I plan to operate?
  A sole proprietorship ends when the owner steps away. A corporation, however, continues regardless of ownership changes, making it easier to sell or transfer.
• Do I need credibility with lenders or investors?
  Incorporated businesses are often seen as more stable and reliable, which can make a difference when securing financing or partnerships.

How Main Street Law LLP Can Help

A little bit of planning at the outset can make all the difference. Registering a trade name is quick, simple, and affordable—perfect for testing an idea or starting small. Incorporation, however, provides the liability protection, tax advantages, and credibility many businesses need to grow, thrive, and endure.

Choosing the right structure isn’t just a formality—it’s a strategic step that can shape your future success. The knowledgeable Business Law Lawyers at Main Street Law LLP work with you to understand your goals and provide practical, tailored advice—whether that means registering a trade name, incorporating, or planning for long-term governance and succession.

Please contact any of our Business Law or Corporate Lawyers in our Spruce Grove, Edmonton, or Drayton Valley offices today to schedule your initial consultation.

The post Incorporating vs. Registering a Trade Name in Alberta: What’s Best for Your Business? appeared first on Main Street Law Llp.

We’ve seen many business owners stumble at this stage, not because of bad intentions, but because they underestimated the legal requirements that come with employment. The good news? With the right preparation and support, you can hire with confidence, protect your business, and set your team up for success.

This guide highlights the key legal considerations every Alberta business owner should understand before bringing on their first employee.

Understanding Alberta’s Employment Standards

Alberta’s employment standards legislation sets the baseline for every employment relationship in the province. These aren’t optional — they are mandatory requirements that apply from day one.

Here are some of the core areas you’ll need to comply with:

• Hours of Work & Overtime – Rules cover maximum hours, overtime thresholds, and pay rates.
• Vacation Entitlements – Employees earn vacation time and pay as a legal right, not a perk.
• General Holidays – Statutory holidays have specific pay and time-off rules.
• Job-Protected Leave – Parental leave, compassionate care leave, and other types of leave must be respected.
• Minimum Wage – Compliance goes beyond hourly pay; it includes tipped staff and irregular schedules.

Record-Keeping Obligations

Accurate records of hours, wages, overtime, vacation, and terminations aren’t just good practice — they’re a legal requirement. These records are also your best protection in the event of a dispute or audit. Start strong with reliable systems so you’re not scrambling to backfill later.

Human Rights: Building a Fair and Inclusive Workplace

The Alberta Human Rights Act applies to every workplace. Compliance isn’t only about avoiding liability — it’s about building a respectful culture that helps you attract and retain good people.

• Protected Grounds – Race, gender identity, disability, age, family status, sexual orientation, and more.
• Duty to Accommodate – Employers must make reasonable accommodations for employees’ needs, up to the point of undue hardship.
• Systemic Issues – Even neutral policies can unintentionally create barriers. Regular policy reviews are key.

Policy Development

Before your first hire, put core human rights and workplace conduct policies in place. A clear framework for expectations, complaints, and investigations shows your commitment to fairness and gives both you and your employees clarity moving forward.

Employee vs. Contractor: Getting It Right

One of the most common (and costly) mistakes small businesses make is misclassifying workers. Whether someone is an employee or an independent contractor has major tax, liability, and termination implications.

Courts and regulators look beyond labels to the actual relationship, considering factors such as:

• Control & Supervision – Who sets hours and directs the work?
• Financial Risk – Does the worker supply their own tools and carry risk of profit or loss?
• Integration – Is the worker central to your operations or providing outside expertise?
• Exclusivity – Do they work only for you, or for multiple clients?

Getting this wrong can lead to tax penalties, WCB issues, human rights liability, and termination pay obligations. It’s far cheaper to classify correctly from the start than to fix mistakes later.

Termination: Planning for the Exit

Canada does not have “at-will” employment. In Alberta, termination is one of the most legally complex areas of employment law.

• Termination With Cause – Only possible in rare, serious cases such as misconduct or willful disobedience. Courts require clear documentation and progressive discipline in most cases.
• Termination Without Cause – Requires notice or pay in lieu. While legislation sets minimums, courts often award “reasonable notice,” which can be much higher.
• Constructive Dismissal – Major changes to hours, duties, pay, or location without consent can amount to termination even if you didn’t intend it.

Properly drafted employment contracts can help limit your liability — but only if they’re written and implemented correctly.

Workers’ Compensation & Safety Obligations

Most Alberta employers must register with the Workers’ Compensation Board (WCB). This coverage protects both you and your employees if workplace injuries occur.

In addition, Alberta’s Occupational Health and Safety (OHS) Act applies to all workplaces, regardless of size. Key duties include:

• Providing a safe work environment
• Training employees on hazards and safety procedures
• Conducting regular hazard assessments
• Reporting certain incidents promptly

Employees also have rights, including refusing unsafe work and protection from retaliation if they raise safety concerns. Harassment and violence prevention policies are now mandatory for most employers, recognizing that safety is psychological as well as physical.

Practical Steps Before You Hire

Based on our experience helping Alberta businesses, here’s a roadmap for first-time employers:

Before Hiring:

• Develop workplace policies (human rights, health & safety, conduct).
• Draft proper employment agreements.
• Register with WCB and any other required programs.
• Set up reliable record-keeping systems.

During Hiring:

• Conduct legally compliant interviews.
• Run reference checks appropriately.
• Complete all necessary documentation.

After Hiring:

• Provide a thorough orientation.
• Communicate policies and expectations clearly.
• Monitor compliance and adjust as your business grows.

Why Legal Guidance Matters

Employment law is complex and constantly evolving — from new harassment requirements to changing human rights obligations. A lawyer helps you:

• Put the right contracts and policies in place
• Prevent costly missteps with classification or termination
• Stay compliant as laws and best practices evolve
• Build a strong legal foundation for growth

Moving Forward with Confidence

Hiring your first employee is a major milestone—and the way you handle it can shape the future of your business. From understanding Alberta’s employment laws to putting the right contracts, policies, and safety measures in place, there’s a lot to consider.

The knowledgeable Business Law Lawyers at Main Street Law LLP work closely with Alberta business owners to ensure every step of the hiring process is legally sound. We can draft tailored employment agreements, develop compliant workplace policies, guide you through employment standards and human rights requirements, and advise on occupational health and safety obligations. Our goal is to help you protect your business, support your employees, and set a strong foundation for growth.

If you’re ready to make your first hire—or want to review your existing employment practices—contact the Business Law Lawyers at Main Street Law LLP. We’re here to provide clear advice, practical solutions, and the peace of mind that comes from having a trusted legal partner on your side.

Contact us today at 780-960-8100 or visit mainstreetlaw.ca/business-law-lawyer to schedule your consultation.

The post Hiring Your First Employee in Alberta: A Legal Roadmap for Success appeared first on Main Street Law Llp.

At Main Street Law, we’ve helped entrepreneurs across Spruce Grove, Edmonton, and Drayton Valley start and scale thriving businesses built on solid ground. Whether you’re opening a cozy café, launching a freelance service, or setting up a retail shop, making smart legal decisions now can protect you from expensive headaches later.

Below, you’ll find five must-do legal steps for every Alberta business owner.

1. Choose the Right Business Structure

Your business structure shapes everything from how you pay taxes to your level of personal liability. The best option depends on your goals, risk tolerance, and growth plans. Here’s a quick rundown:

• Sole Proprietorship

The simplest structure, easy and affordable to set up. However, you’re personally liable for all financial obligations.

• Partnership

Shared ownership (and risks!) between two or more people. Profits are split—but so is liability.

• Corporation

A separate legal entity offering limited liability, potential tax advantages, and greater growth opportunities, though you’ll need to meet more compliance requirements.

Why it matters:

Picking the wrong structure can expose you to unnecessary risk or cause trouble come tax time. Fast-growing businesses or those taking on significant debt should be especially careful.

Action Step:

Consult with a business lawyer to clarify your goals and risk profile. At Main Street Law, we’ll help you select and formally establish the best-fit structure, setting you up for peace of mind from day one.

2. Register Your Business Name and Obtain Licenses

Before you design that logo or order your first set of business cards, make sure your business name is available and legally registered. In Alberta, registration requirements vary by structure:

• Sole Proprietorships & Partnerships: Register with Alberta Registry Services.
• Corporations: Choose a unique name or operate under a numbered company.

Don’t forget, you may also need municipal business licenses, zoning permits, or health and safety certifications, depending on your industry.

Why it matters:

Failure to register or obtain necessary permits can mean fines, forced name changes, or even temporary shutdowns.

Action Step:

Our team can guide you through the registration process, perform name searches, and ensure you secure all the licenses needed to stay compliant.

3. Draft Strong Contracts

Whether you’re hiring employees, working with vendors, or providing services, written contracts are your best defense. Relying on handshake deals or free online templates leaves you open to risk.

Key contracts to consider include:

• Employment agreements
• Service contracts
• Vendor/supplier agreements
• Non-disclosure agreements (NDAs)
• Partnership agreements

Why it matters:

Clear, enforceable contracts protect your interests, reduce misunderstandings, and provide a plan if things go sideways. They also demonstrate professionalism and help build lasting trust with partners and clients.

Action Step:

Work with a business lawyer to draft or review contracts tailored to your specific business needs and Alberta’s legal standards.

4. Protect Your Intellectual Property

Your business name, logo, website, and unique offerings are valuable assets. Take steps now to secure what you’ve created.

Consider protecting your IP by:

• Registering your website’s domain name
• Trademarking your business name or logo
• Copyrighting original content (blogs, marketing, training guides)
• Using confidentiality agreements for sensitive business info

Why it matters:

If not protected, your brand or original work might be used by others or, worse, force you to rebrand if someone else claims prior ownership.

Action Step:

Main Street Law can help you inventory your intellectual property, determine what should be registered, and take swift action to prevent misuse.

5. Understand Your Legal Obligations

Every business must comply with a mix of general and industry-specific legal requirements, such as:

• Tax compliance: GST, payroll deductions, corporate income tax
• Occupational Health & Safety (OHS): Ensuring a safe work environment
• Employment Standards: Rules for hiring, firing, payroll, vacation
• Privacy Laws: If you collect or store personal data
• Consumer Protection Legislation: Your obligations to clients and customers

Why it matters:

Even accidental non-compliance can result in fines, lawsuits, or reputational damage. The earlier you know your obligations, the better.

Action Step:

Our experienced team will guide you through the relevant rules and regulations for your business, helping you create policies that keep you compliant and confident.

Bonus Tip: Don’t DIY Your Legal Foundation

Cutting corners on legal matters might seem like a cost-saving move, but it can lead to bigger expenses down the line. Think of solid legal support as an investment in your business’s longevity and peace of mind.

Even a short consultation with a lawyer can help you:

• Avoid common legal pitfalls
• Understand your responsibilities
• Feel confident that your business is built on a strong foundation

How Main Street Law Can Support Your Success

At Main Street Law, we’re passionate about helping Alberta businesses grow. From formation to expansion, our personalized, action-focused support helps you move forward with clarity and confidence.

We can help you:

• Choose and register the right business structure
• Draft and review contracts
• File trademarks and protect your brand
• Navigate employment and regulatory compliance
• Plan for success long term

Contact us today at 780.960.8100 or visit mainstreetlaw.ca/business-law-lawyer to schedule your consultation.

Start your business with the right legal foundation and set yourself up for success!

The post Starting a Small Business in Alberta? 5 Legal Essentials You Shouldn’t Overlook appeared first on Main Street Law Llp.

Types of Termination

Termination (also called “dismissal” or being “fired”) takes place when an employer ends the employment relationship unilaterally, without the prior agreement of the employee. Terminations largely fall into two categories: “with-cause terminations”, which do not require notice, and “without-cause terminations”, which require proper notice to be given.

With-Cause Terminations:

In a with-cause termination, the employer terminates the employee because of certain conduct of the employee such as tardiness, insubordination, or even more extreme conduct like harassment. Circumstances that can serve as a valid cause for termination in one case may not constitute valid cause for termination in another. However, terminations for cause allow the employer to terminate the employment relationship immediately, without prior notice to the employee.

Without-Cause Terminations:

In a without-cause termination, the employer ends the employment relationship for reasons that are not valid causes for termination. Employers are generally free to end the employment relationship in this way, subject to a requirement to give sufficient notice of this termination to the employee. The sufficient notice is required to help the soon-to-be ex-employee find some alternate, comparable employment.

Severance and Pay-in-Lieu of Notice:

Some employers also have concerns about allowing an employee to continue to work for them after the employee has been provided with notice of termination, fearing poor work product or a poor attitude. In these cases, employers can instead provide the terminated employee with severance, or “pay-in-lieu of notice”, whereby the employer pays the employee a lump sum payment equal to the wages the employee would have earned if the employee had continued to work for the duration of the notice period.

Determining the Notice Period:

This requirement to provide sufficient notice begs the question: how much notice is required?

As with almost any legal question, the answer is: “It depends”.

At the most basic level, an employee that is terminated without cause must be given notice according to requirements in law (also called “statutory minimums”). In Alberta, the statutory minimum notice is stated in section 56 of the Employment Standards Code, RSA 2000, c E-9, and is based solely on the length of time that the employee was employed by the employer prior to the termination. For example, an employee who has been employed by an employer for a length of time between 4 to 6 years is entitled to a minimum of 4 weeks of notice before termination (though this is subject to change as a result of amendments to the Employment Standards Code).

The notice requirement is more complicated than these statutory minimums however, as employees can sometimes be entitled to common law reasonable notice periods, which can be significantly greater than the reasonable notice provided by the Employment Standards Code. This common law notice period is determined by the courts on a case-by-case basis and is based on more than just the length of employment, taking into account several other factors including the age of the employee at termination and the kind of position the employee held.

Considerations Under the Alberta Human Rights Act:

The Alberta Human Rights Act, RSA 2000, c A-25.5, also must be considered in any termination so as to ensure that the termination is not for any discriminatory reason. The analysis required for discrimination and complaints under the Alberta Human Rights Act is complex however and will be discussed in more detail in another post.

Complex Legal Matters:

Determining whether a termination is with-cause, without-cause, or discriminatory, as well as determining the notice periods which may be required, are complex legal matters which require research by your Employment Law Lawyer into the original employment contract, the employee and employer’s circumstances, the law in your area and industry, and the previous decisions of courts and tribunals.

Seeking Legal Assistance:

If you are an employer with questions about how to minimize your legal risk when terminating an employee, or if you are an employee who thinks that you may have been terminated improperly, Main Street Law LLP’s Business Law Lawyers and Employment Law Lawyers in Spruce Grove, Edmonton, and/or Drayton Valley can help answer your questions and help guide you to the best legal solutions for your circumstances. Please contact any of our Business Law Lawyers or Employment Lawyers in Spruce Grove, Edmonton, or Drayton Valley to schedule your initial consultation.

Please be advised that this article was prepared by Richard Copeland, Business Law Lawyer and Employment Lawyer with Main Street Law LLP in Spruce Grove in May of 2023. This article is intended as a general overview and general information on a legal subject, as the law exists at the time of writing, and is not intended to be legal advice. Often the specific facts of your legal matter may change or impact the applicability of this information. For legal advice related specifically to the facts of your concern, please consult with any of the Business Law Lawyers or Employment Lawyers at Main Street Law LLP in either Spruce Grove, Edmonton, or Drayton Valley

The post What is a Wrongful Dismissal Claim?  appeared first on Main Street Law Llp.

1. Sole Proprietorship

A sole proprietorship is the simplest and most common legal structure for new entrepreneurs. It is a business owned and operated by a single individual. Operating as a sole proprietorship allows you to have complete control over your business decisions. However, it also means that you are personally liable for all debts and obligations of the business. This means that if the business faces legal issues or debts, your personal assets may be at risk.

2. Partnership

If you plan to start a business with one or more individuals, a partnership might be the right legal structure for you. In a partnership, two or more individuals share ownership and responsibility for the business. There are two types of partnerships: general partnership and limited partnership.

• General Partnership: In a general partnership, all partners are equally liable for the debts and obligations of the business. It is important to establish a partnership agreement that outlines the roles, responsibilities, and profit-sharing arrangements among partners.
• Limited Partnership: A limited partnership consists of one or more general partners who have unlimited liability, and one or more limited partners who have limited liability to the extent of their investment. Limited partners typically invest capital in the business, but have limited involvement in its day-to-day operations.

3. Corporation

A corporation is a separate legal entity from its owners, known as shareholders. Incorporating your business offers numerous benefits, including limited liability protection for shareholders and potential tax advantages. To establish a corporation, you must file articles of incorporation with the Alberta government, pay the necessary fees, and meet ongoing regulatory requirements.

• Shareholders: Shareholders own the corporation and their liability is limited to their investment in the company. They can transfer or sell their shares, allowing for easy ownership transfer.
• Directors: Directors are responsible for managing the corporation’s affairs and ensuring compliance with legal requirements. They are appointed by the shareholders and play a crucial role in decision-making.  There can be liabilities that arise in being a director. 
• Officers: Officers are appointed by the directors to manage day-to-day operations. They hold positions such as CEO, CFO, or secretary, depending on the needs of the corporation.

4. Cooperative

If you envision a business that operates based on cooperative principles, a cooperative legal structure might be suitable for you. Cooperatives are owned and operated by their members, who have a say in the decision-making process. Members contribute capital and share in the profits and benefits of the cooperative. The cooperative model is often utilized by agricultural, retail, and community-based organizations.

5. Limited Liability Partnership (LLP)

An LLP is a relatively new legal structure available to certain professional service businesses, such as law firms, accounting firms, and architectural practices. It combines elements of both partnerships and corporations, providing partners with limited liability while allowing them to participate in the management of the business. An LLP must register with the Alberta government and comply with specific regulations.

Choosing the Right Legal Structure

Selecting the most suitable legal structure for your business is a critical decision that requires careful consideration. Here are some factors you may consider with he Business Law Lawyers at Main Street Law LLP when considering your choices:

1. Liability: Consider your personal exposure to financial risk. If you want to protect your personal assets, consider a structure that provides limited liability, such as a corporation or LLP.
2. Taxes: Different legal structures have varying tax implications. Consult with a tax professional as well as the your Business Law Lawyer to understand how each structure will affect your tax obligations and potential benefits.
3. Control and Decision-making: Evaluate how much control you want over the business. Some structures, like sole proprietorships and partnerships, provide more direct control, while others, like corporations, involve a more complex decision-making process.
4. Growth and Funding: Consider your long-term goals for the business. If you plan to seek external funding or bring in investors, a corporation may be more appealing due to its ability to issue shares and raise capital.
5. Compliance and Administration: Assess the administrative and regulatory requirements associated with each legal structure. Some structures, such as corporations, have more stringent reporting and record-keeping obligations.

If you choose a structure that requires administrative and regulatory compliance, the Business Law Lawyers and Corporate Law Lawyers at Main Street Law LLP can assist you in ensuring your needed compliance. 

Selecting the right legal structure for your business is a crucial step in ensuring its success and protecting your personal assets. Each legal structure has its own advantages and considerations. It is important to consult with the Business Law Lawyers and Corporate Lawyers as well as your professionals to  guide you through the decision-making process,  based on your unique circumstances and business objectives. By choosing the most appropriate legal structure, you can set a solid foundation for your entrepreneurial journey.

Please be advised that this article was prepared by Eva Forys, with Main Street Law LLP in Spruce Grove in June of 2023.  This article is intended as a general overview and general information on a legal subject as the law exists at the time of writing and is not intended to be legal advice.  Often the specific facts of your legal matter may change or impact the applicability of this information.   For legal advice related specifically to the facts of your concern, please consult with any of the Business Law Lawyers, Real Estate Commercial Lawyers, or Corporate Law Lawyers at Main Street Law LLP at any of our Spruce Grove, Edmonton, or Drayton Valley locations. 

The post Which is the Right Legal Structure for Your Business? appeared first on Main Street Law Llp.

Transferring Property into a Corporation

This distinction is important for many reasons, one of which is how an individual might go about transferring property that they own personally into a corporation that they control. This is common in situations where a business starts as a proprietorship, being an individual who does business personally without incorporating a corporation, but later decides to create a corporation as the preferred business vehicle – generally for liability protection and/or tax saving purposes.

Tax Implications of Property Transfer

In these situations, the individual, as a proprietor, has generally accumulated assets, equipment, inventory, and other such property in their personal name that now needs to be transferred into the corporation such that the corporation can use it to generate income. Sometimes this property can be transferred without triggering the payment of tax, but in cases where an asset (say an investment property) was acquired several years prior for $100,000 and has appreciated in value to $250,000 in fair market value, the transfer of the asset to the corporation may be considered a taxable disposition and the individual may find themself liable to pay tax on the gain in value (called a capital gains tax). This may seem unfair, but recall that the corporation is, for the purposes of the law, a separate legal entity, so this would be the same tax that would be payable if you sold the asset for cash to an arms-length buyer on the open market.

Introduction to Rollovers

However, there are some exceptions to this general rule, and one of these exceptions is called a Rollover. Generally speaking, a Rollover is a way to transfer these kinds of assets into the corporation in exchange for shares of a said corporation rather than cash (although it is sometimes possible for some cash consideration to be paid to the individual from the corporation as part of the transaction) – essentially “trading” the asset for shares in your own corporation.

Specific Criteria for Rollovers

Rollovers are specific exceptions to the general rules in the Income Tax Act (Canada) and have many unique and specific criterium that need to be met before a transfer will qualify. However, with most private, closely held corporations they are a common way to defer tax that would otherwise be payable and operate as a valuable tax deferment tool.

Note that a Rollover can also be used to transfer property between related corporations, and in a variety of other circumstances, but the commentary in this article is intended to be an introduction to the concept rather than a comprehensive article on all of the different types of Rollovers permitted by the Income Tax Act (Canada). A Rollover can also be used as part of a restructuring transaction, as part of an estate freeze, or in a variety of other situations.

Collaborative Approach

Your accountant should always be consulted in situations like these and will be able to provide an opinion on the best way to transfer the assets into your corporation on a tax-efficient basis. Sometimes this is not possible as the government has prescribed very specific rules to govern the Rollover exceptions, and there are certain conditions that have to be met before the transfer may qualify. There are also sometimes legal reasons why a Rollover (or transfer of the asset in general) may be undesirable for an individual. This is why it is important that your accountant works closely with your Business Law Lawyer (and vice-versa) when contemplating a Rollover as each of the Business Law Lawyer (Corporate Lawyer) and accountant are experts in different fields.

Expert advice from both your accountant and your Corporate Lawyer is important as the tax planning efficiency of a Rollover transaction sometimes has to be considered in light of legal and practical concerns related to the transfer of assets into a corporation. This collaboration between your Business Law Lawyer and your accountant will help minimize tax liabilities, avoid unexpected tax consequences, and at the same time help the corporation and the individual shareholder appropriately manage risk.

The Role of Business Law Lawyer

Provided that a Rollover is available to your specific transaction, your accountant will work in conjunction with your Business Law Lawyer at Main Street Law LLP to formulate a suitable plan to transfer these assets into the corporation on a tax-deferred (this is the “Rollover”). This plan may also require an expert to evaluate the present Fair Market Value of the asset being transferred, and generally, the Corporate Lawyer will insert a “price-adjustment clause” into the Rollover agreement as a “safety” in case CRA disagrees with the chosen value of the asset.

Considerations and Costs of a Rollover

A Rollover is a moderately complex transaction that requires careful consideration and expert guidance from your accountant and Business Law (Corporate) Lawyer. It can be costly in terms of legal and accounting fees, but the accountant will consider the relevant cost to benefit consideration to the individual before recommending a Rollover as an option. Yes, they can be expensive in terms of professional fees, but if your accountant is recommending a Rollover it is likely because this will create substantial tax savings for the individual shareholder in the mid-to-long run.

Decision and Implementation of Rollover

If you decide to proceed with the Rollover then your Spruce Grove or Drayton Valley Based Business Law Lawyer will prepare the necessary corporate and transfer documents in accordance with the rules and the tax plan, the client will sign the same, and the accountant will then file the required documentation and elections with the Canada Revenue Agency. The asset will then belong to the corporation (instead of the individual), the individual will acquire shares (or additional shares) in the corporation, and no (or little) tax will be paid immediately as a result of the transaction.

Making an Informed Decision

Ultimately, the individual client is the party that gets to weigh the pros and cons of such a transaction, the cost of the same, and make the decision – but this decision is easier to make if the individual has a good accountant and a good Business Law (Corporate) Lawyer who can provide the necessary information to the client for their consideration. If you believe that a Rollover might be useful in your particular circumstances, the Business Law and Corporate Lawyers at Main Street Law LLP would be pleased to discuss the matter with yourself and your accountant such that we can explore this option for you.

Please be advised that this article was prepared by Justin Danzo, Business Law Lawyer and Corporate Lawyer with Main Street Law LLP in Spruce Grove in May of 2023. This article is intended as a general overview and general information on a legal subject as the law exists at the time of writing, and is not intended to be legal advice. Often the specific facts of your legal matter may change or impact the applicability of this information. For legal advice related specifically to the facts of your concern, please consult with any of the Business Law Lawyers or Corporate Lawyers at Main Street Law LLP in either Spruce Grove or Drayton Valley

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