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The hazards of doing it yourself:
Why you should 
use a lawyer
to incorporate 
your business 

 

DIY incorporate business

published 27 March 2025
 

As corporate lawyers, we often meet with clients who have tried to set up their own corporation.  Unfortunately, in their attempt to save money they frequently miss out on useful information.

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There are certain considerations that an accountant and lawyer can guide you through when incorporating a business. These include advising you on whether or not it is the right time to incorporate (i.e., Is the business generating enough income for it to make sense?); whether a pre-existing corporation should be used or if a new one should be incorporated; who the shareholders will be; and the jurisdiction that is best for the corporation to be in.

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​Although anyone can incorporate, the above considerations are some examples of what accounting and legal professionals will discuss with you. Additionally, there are documents or corporate records which must be completed and other recommendations that they might have to help you with incorporating your business.

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First, there are specific legal requirements for corporations that include annual filings, director obligations and tax regulations. Many professional corporations have other specific requirements. Failing to comply with these laws can result in penalties or even the dissolution of your corporation.

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​A corporate lawyer helps ensure that your business stays compliant with all provincial and federal regulations. For example, it is necessary to maintain a minute book among other corporate records.  If such records are not maintained, severe consequences can arise such as the loss of corporate status or the inability to borrow funds. Lawyers are often responsible for maintaining corporate records for their clients.

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Additionally, corporate lawyers are in a position to discuss shareholder agreements which define the rights and responsibilities of business owners and help prevent disputes, and employment agreements among other things.  Incorporation is just the first step – over time, your business may need to restructure, bring in investors, or expand into new markets. Corporate lawyers can provide strategic advice on how to scale your business while remaining protected.

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We regularly discuss other options such as whether to establish a provincial corporation (registered under Manitoba’s, Saskatchewan’s, or any other province’s laws) or a federal corporation (registered under Canada’s laws).  A corporate lawyer can help determine which structure is best for your business, considering factors such as taxation, liability and expansion opportunities, thereby creating possibilities for future benefits or business growth.

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More often than not, when someone has set up their own corporation, they have not done it the way we would.  We have seen corporations set up without any attributes attached to shares, corporations where no shares were issued, as well as situations where by-laws are not created, or officers are not appointed.  Often, the client comes to us to rectify the matter.  Sometimes, the costs of fixing the setup are greater than the costs of incorporating.  The outcome can be even worse in situations where the mistake is not caught early on.

 

One of the key benefits of incorporation is the legal separation between your personal and business finances. However, if the incorporation process is not handled correctly, business owners may still be personally liable for debts or legal claims. A lawyer will ensure that your corporate structure is set up in a way that fully protects your personal assets.

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Conclusion

 

We have focused on the reasons why you should use a lawyer; however, tax efficiency is often the most significant reason to incorporate. We regularly work with accountants and we can refer you to an accountant so you can get advice on corporate tax structures; dividend distribution strategies; business deductions and write-offs; goods and services tax (GST) or provincial sales tax (PST) obligations.

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While it may be tempting to incorporate your business on your own to save money, the risks of doing so can far outweigh the initial cost of hiring a corporate lawyer. From ensuring proper legal protection to setting up a strong foundation for growth, legal professionals play a crucial role in safeguarding your business interests. Often individuals who have set up a corporation on their own have spent countless hours reviewing the requirements for incorporating, navigating the Companies Office or Corporate Registry, and they only end up overwhelmed. 

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If you are incorporating a business in Manitoba, consulting with a corporate lawyer is a smart investment that will help you navigate the legal complexities and avoid costly mistakes. By securing professional legal guidance, you can focus on what matters most – building and growing your successful business.

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DISCLAIMER: This article is written for informational purposes only and does not constitute legal advice.  The views expressed are solely the author’s and should not be attributed to any other party, including Meighen Haddad LLP.  If you need legal advice, please call our office at (204) 727-8461.

The Author
 

Stephen Branigan

STEPHEN BRANIGAN
Associate 

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