Incorporation refers to the legal process of creating a separate corporation to own your business. This provides for protection from your personal assets (in most cases) and can offer certain tax advantages, such as the ability to benefit from the Lifetime Capital Gains Exemption.

Most businesses benefit from incorporating once there is meaningful revenue, business risk, or multiple stakeholders involved. Incorporation provides limited liability protection (your personal assets are generally shielded from business debts and claims), can offer tax advantages, and makes it easier to bring on investors or co-owners later.

The right timing depends on your specific situation. A lawyer can help you weigh the cost of incorporation against the risks of operating unincorporated.

There are two general forms of transactions when buying or selling a business: an asset or share deal.

In an asset transaction, the buyer is purchasing the assets of the target business (e.g., fixtures, furnishings, and equipment, motor vehicles, customer lists, etc.). In a share transaction, you buying the company itself, which also involves the assumption of all its pre-existing liabilities. Asset transactions do not naturally share this feature.

A minute book is a physical or digital record of all key legal, regulatory, administrative, and commercial records of your corporation. It should contain the corporation’s articles of incorporation, amalgamation, dissolution, or amendment, and other constating documentation, registers for the directors, officers, and shareholders of the corporation, new and cancelled share certificates, copies of each agreement the corporation is party to, etc.

Minute books can become vital when one sells their business or is looking to raise capital as prospective buyers and investors will look through the minute book as one of their first steps of due diligence. Further, regulatory bodies or law enforcement may request the corporation’s minute book for audit related inquiries.

A shareholder agreement is a private contract between the shareholders of a corporation that governs how the company is run, how decisions are made, and what happens when shareholders disagree, want to leave, or want to sell. Unlike a corporation’s articles or by-laws, a shareholder agreement is confidential.

If you have more than one shareholder, or even a co-founder you trust completely, you need an agreement. The time to negotiate the rules is before there is a dispute, not during one.

In an asset transaction, the buyer purchases specific assets of the business: the equipment, contracts, goodwill, customer lists, etc.. The seller will retain the corporate entitiy and its historical liabilities. Buyers often prefer asset deals because they can choose what to acquire and leave liabilities behind.

In a share transaction, the buyer purchases the shares of the corporation itself, which includes everything the company owns and owes. Share deals can offer tax advantages to sellers (particularly the Lifetime Capital Gains Exemption) and are simpler for transferring contracts that would otherwise require third-party consent.

The right structure depends on your specific situation, what’s being bought, and how the other side wants to deal.

At minimum, a well-drafted shareholder agreement should address: how major decisions are made (and what requires unanimous consent), what happens if a shareholdoer wants to sell (rights of first refusal, drag-along and tag-along rights), what happens if a shareholder dies or becomes incapacitated, non-competition and non-solicitation obligations, how disputes are resolved, and how the company can be wound up. The specifics will vary depending on the size of the company, the number of shareholders, and the nature of the business.

Due diligence is the process by which a buyer investigates a target business before completing a purchase. It typically covers the company’s corporate records (minute book, ownership history), material contracts, financial statements, intellectual property, employment arrangements, regulatory compliance, and any existing litigation or liabilities. The goal is to confirm that the business is what the seller represents it to be, and to identify any issues that should affect the price, the structure, or whether to proceed with the transaction at all.