In the wake of COVID-19, many fitness junkies have been remiss as to where they’re meant to be keeping themselves active. Facilities have been entirely shut down since social distancing mandates have been put in place, some even being forced to shut down permanently after being unable to suffer the loss of income. Now that Phase 2 of BC’s Restart Plan is in full swing, many facilities are starting to consider opening their doors again. Another subset of entrepreneurs have also been considering opening new facilities since demand will be high in the coming months.
During the province-wide shut down, many businesses have opted into going virtually. For fitness companies, that means offering online courses and classes to keep their clients active while maintaining social distancing practices. This new way to workout has inspired many people to start businesses that offer online-exclusive personal training and workout classes, as well as equipment sales, all to be done from the comfort of your own home. Offering online classes not only helps clients keep themselves active but also allows trainers the opportunity to continue working through this crisis.
Since these developments, we have noticed a marked increase in trainers and new fitness facilities wanting to incorporate to keep up with the demand for digital workouts. For those of you who are thinking the same thing, we thought we would break down the process of incorporation for anyone interested in going forward with their own business.
1. Should you incorporate?
The complicated answer to this question is ‘it depends’. There are three ways to structure your business in British Columbia: Sole Proprietorship (one self-employed person), Partnership (two or more self-employed persons), and starting a Company (acts as a separate entity from you, the individual). For more information on how to choose which structure to go forward with for your business, contact us today. Regardless of which structure you’d go forward with, we really recommend speaking to your accountant at this stage to ask if they think you should incorporate. If you don’t have an accountant or aren’t happy with who you’re working with now, let us know and we’d be happy to recommend some friends of Paperclip Law. We may also have a shelf company available if that fits your financial circumstances.
2. Who owns what?
The people or companies that own the Company are called shareholders. The shareholders are the owners and can be active operators of the business or silent investors. If there is more than one shareholder, we strongly advise you enter into a Shareholder’s Agreement.
3. What will your new company be called?
This is the fun part! You will need to choose either a numbered company or a named company. With a numbered company, you are not able to choose the number your company is named. The BC Corporate Registry simply assigns you the next available number. With a named company, the BC Corporate Registry allows you to submit three name choices in order of preference with each name reservation application so all three choices will be submitted at the same time.
4. Who does what?
When starting a business, you will need to decide who does what by designating a board of directors. This board will be responsible for making all the big decisions about your company. Directors are elected by the Shareholders to direct the activities and business of the company. Officers are responsible for helping to carry out the decisions of the board. Officers are elected by the Directors to carry out the operations of a company.
5. Who will be the company’s Registered and Records Office (RRO)?
An RRO is the location, company, or entity that is responsible for keeping the company’s record book up to date by preparing and filing the annual reports and preparing required resolutions to keep the company in good standing. RRO is also where legal documents are served to a company, so consider someone who will be available to receive such service during regular business hours.
Paperclip Law usually acts as RRO for our clients. The cost is approximately $385 per year, plus now the Transparency Register of $150 per year, charged on the birthday of incorporation. Depending on your circumstances, there may be additional costs that are incurred, but we’ll discuss all of those ahead of time so there are no surprises.
If you’ve made it this far and are still interested in starting your own company, please don’t hesitate to contact us to get started.
