In this article, we’ll cover the following topics:
- How to transfer your business to the next generation
- Estate freeze
- Family trust
- Section 85 rollover
- Common shares

How to transfer your business to the next generation

A common mistake business owners make when transferring their business to non-arms-length individuals (e.g. their children, siblings, etc.) is setting the value of their business at a nominal amount – essentially gifting their business to the next generation.

This article will discuss the benefits of having a corporate will (also known as a ‘secondary’ or ‘restricted’ will), and why you may need one.

In this article, we’ll cover the following topics:

Federal versus provincial incorporation:

- Filing fees

- Name protection

- Registration

So, you’ve decided to incorporate your business. Now you need to decide where to incorporate – in a certain Canadian province, or at the federal level.

There are three things to keep in mind when considering federal incorporation versus provincial incorporation.

Filing Fees

The cost of filing federally is $200, plus the name reservation (NUANS, which is $13.80). At the provincial level, the filing cost varies by province. In British Columbia, for example, provincial incorporation currently costs $351.50, plus the name reservation (either $31.50 to $131.50 depending on the turnaround time you require).

In this article, we’ll cover the following topics:

- What is a section 85 rollover?

What is the section 85 rollover?

A Section 85 rollover is a mechanism under the Income Tax Act of Canada that allows taxpayers to transfer eligible property to another entity, usually a corporation, without the transfer resulting in an immediate personal tax liability. Used most often by small business owners who are operating as sole proprietors of their businesses and whose sole proprietorship has significant value, Section 85 rollovers allow sole proprietors to transfer properties on a tax-deferred basis, without realizing any sort of taxable gain on the transfer of property.

In this article, we’ll cover the following topics:

- What is a non-competition clause?

- What is a non-solicitation clause?

As a business owner, you’ll encounter non-competition and non-solicitation clauses in all manner of contractual documents: employment agreements, shareholders’ agreements, partnership agreements, and more. As such, it’s important to understand what they are and how they’re different from each other.

Non-Competition Clause

Often found in employment agreements, non-competition clauses prohibit a person from engaging in competitive behavior with the business for a set period of time. Under a non-competition clause, an employee who recently quit or was fired isn’t allowed to begin working immediately for a competitor; often they will need to wait several months, sometimes a full year, before they can do so without risking legal repercussions.

Benefits of Incorporation for Canadian Businesses: Everything You Need to Know

Benefits of incorporation for small businesses in Canada:

- Liability shield

- Tax savings

- Lifetime capital gains exemption

- Selling Flexibility

What are the benefits of incorporation in Canada?

If you own a small business in Canada, here are four reasons why you may want to incorporate: liability shield, tax savings, lifetime capital gains exemption, and selling flexibility.

Liability Shield

If your business is not incorporated, then you’re a sole proprietor, meaning that you and your business are one and the same. Anything that happens to the business also happens to you personally, and vice versa. Your personal assets - your home, car, savings - are on the line.

Bare Trusts: The Basic Terms Every Canadian Business Owner Should Know

In this article, we’ll cover the following topics:

- What is a bare trust?

- What are the benefits of bare trusts?

- Avoiding property transfer taxes

- Easier change of property ownership

What is a bare trust?

Often used in real estate, bare trusts are legal structures that facilitate the separation of legal and beneficial ownership of a property. The process of creating a bare trust involves appointing a trustee (or ‘nominee’) to be legal owner of the property and hold the legal title on behalf of the beneficial owner. The name “bare trust” is derived from the fact that, unlike in other forms of trusts, the trustee/nominee of the bare trust has no other responsibilities or obligations with respect to the property other than to hold legal title.

Why Every Canadian Business Needs a Shareholders’ Agreement

In this article, we’ll cover the following topics:

• Why shareholders’ agreements are useful

• The legal power of shareholders’ agreements

• The shotgun clause

• Default provisions

Shareholders’ agreements are notoriously frustrating documents, mainly because they are long – in some cases, 60 pages long – and loaded with confusing legalese. Yet they are among the most important documents in any business owner’s arsenal, and having competent counsel on your team can help to eliminate some of that confusion.

Don’t believe me? Here’s a story that will change your mind…

Finding Your First Advisors: A Guide for New Entrepreneurs

In this article, we’ll cover the following topics:

- The first four advisors to your new company

- Bookkeeper

- Accountant

- Financial Advisor

- Corporate lawyer

When starting a business, most entrepreneurs will focus first on generating revenue, and rightfully so – profitability is, after all, the main thing that makes a business viable in the long term. But once you’ve crossed that threshold and your business has begun to take flight, that’s when you start building the next mechanism to keep your business in the air: a circle of key advisors.

But how do you find them? How should you bring them into your circle? Let’s dive in.

Advance Directives vs. Representation Agreements: Key Things to Know

In this article, we’ll cover the following topics:

- What’s an advance directive?

- What’s a representation agreement?

- What’s the difference between the two?

How to Draft a Will: The Basic Terms Every Canadian Business Owner Should Know

In this article, we’ll cover the following topics:

- What makes up an estate?

- What is an executor of an estate?

- What is power of attorney?

- How is power of attorney involved in estate plans?

Cap Tables and Ownership Stocks: The Basic Terms to Know

How to Avoid Lawsuits: A Guide For Canadian Business Owners

In this article, we’ll cover the following topics:

- How to protect your business from lawsuits

- Overcommunicate

- Shareholders’ agreements

- Corporate structure

- Holding companies

- Appropriate contracts

Power of Attorney: Everything Canadian Business Owners Need to Know

In this article, we’ll cover the following topics:

- What is power of attorney?
- The two types of power of attorney
- Who should receive power of attorney

What is power of attorney?

Power of attorney is one of the two most common ways people plan for a time in their lives that hopefully never comes – the day when they are physically or mentally incapable of making decisions on their own. Establishing power of attorney essentially entrusts another person to be seen, through the eyes of the law, as the person who makes all of your decisions, including those that deal with finances and other legal matters.

The 2 Best Strategies to Optimize Your Family Trust’s Taxes

In this article, we’ll cover the following topics:

Family trust tax planning strategies

Strategy 1: Multiplication of lifetime capital gains exemption

Strategy 2: The prescribed rate loan strategy

Let’s start by acknowledging that family trusts are a very complex subject. As such, this article is not meant to be comprehensive and there are many nuances that require expert legal and tax advice. To determine whether or not a family trust is right for you, it’s best to speak with your tax advisor and lawyer.

That said, there are two important tax planning strategies to keep in mind when considering a family trust.

Employee Stock Options: Everything Canadian Business Owners Need to Know

• In this article, we’ll cover the following topics:

• What’s a share?

• What’s a stock option?

• Why employee stock options are useful

• The best time to use an employee stock option plan

• How much to put into an employee stock option plan

• Tax consequences of employee stock option plans

• What happens to employee stock option plans if a company is bought

• What happens to employee stock option plans if an employee is fired or quits

4 Ways Canadian Business Owners Can Benefit From Using a Holding Company

In this article, we’ll cover the following topics:

• What’s a holding company?

• Four reasons to use a holding company

• To protect your business assets

• To maintain eligibility for lifetime capital gains exemption (LCGE)

• To use as an investment vehicle

• To control the timing of dividend payments

What Is a Family Trust, and Why Is It Useful to Business Owners in Canada?

In this article, we’ll cover the following topics:

• What is a family trust?

• How does a family trust work?

• Why are family trusts useful?

• When are family trusts needed for a family-held corporation?

• What is an “estate freeze”?

• What happens to a family trust if the family-held corporation gets sued or a dispute arises within the corporation?

In this article, we'll cover off some of the nuances of that and ensure that if you are thinking about making use of the principle rents exemption that you are doing it properly. So the first thing you want to keep in mind is that the exemption needs to be reported.The principal residence exemption allows you to sell a property and not pay any tax on it, the capital gain that you would normally accrue from the sale of that property doesn't apply. Since 2016, the CRA has required that this exemption be reported on your personal income tax return. So you want to make sure that you're working with your accountant to ensure that that is done.The second criteria is that residence exemption is only going to apply to a property that you actually live in. So a property the CRA uses the term 'ordinarily inhabited.' So while there's not a specific set number of days that the CRA sets out that you are actually resident inside of the home, it is the CRA if they assess and looking deeper into whether the exemption actually applies or not.

4 Things To Consider When Selling Your Business

You might be selling your business because you're ready to retire, because you want to pass it down to the next generation, or perhaps because you have just moved on and you want to pursue different business opportunities. There are some really key items that you're going to want to start thinking about.

Are you structuring your sale through assets or shares?

So goes the old saying, acquire assets, sell shares, with the notion being that it is somewhat more tax beneficial to purchase shares and slightly more tax advantageous for the seller to sell their shares. On the asset side, the rationale for this was that there used to be certain tax factors connected with a company's goodwill that made it highly favorable for a purchaser to buy those assets; those advantages are no longer as important as they once were. However, on the selling of shares, this is still very much the case. Because in Canada, there is a provision known as the lifetime capital gains exemption, which allows you to deduct up to $850,000 of the capital gain on the sale of your business. That is the price difference between the adjusted cost base, or the original purchase price of the firm, which is frequently minimal if you founded it yourself, and the real exit price. If you were able to take full advantage of the lifetime capital gains exemption on the sale of your company, and your company was worth $850,000.