Small Business Legal Checklist for Calgary Entrepreneurs

Starting a small business in Calgary can be an exciting and rewarding journey. However, the legal steps you take early on can determine the success and longevity of your business. From registering your business name to understanding tax obligations, it’s essential to ensure that you’ve covered all the legal bases.

In this article, we have put together a small business legal checklist to help entrepreneurs in Calgary navigate the essential steps of starting and maintaining a legally sound business. By following this guide, you can avoid costly mistakes, reduce legal risks, and set your business up for success.

1. Choose a Legal Structure for Your Business

The first step in starting your business is deciding on its legal structure. This choice affects everything from your taxes to your personal liability. In Alberta, the most common legal structures for small businesses include:

• Sole Proprietorship: The simplest form of business structure where you are the sole owner and responsible for all business activities. You are personally liable for business debts and obligations.
• Partnership: A business owned by two or more people. In a general partnership, all partners share liability for business debts. A limited partnership may have some partners who only contribute capital and aren’t involved in daily operations.
• Corporation: A separate legal entity from its owners (shareholders). Incorporating your business provides limited liability protection and can offer tax advantages, but it requires more complex reporting and governance structures.

Why it matters: The legal structure you choose impacts your liability, taxes, and control over your business. It’s crucial to consult with a business lawyer to determine which structure is best for your goals.

2. Register Your Business Name and Obtain Necessary Permits

Once you’ve chosen your legal structure, the next step is to register your business name. If you're operating as a sole proprietorship or partnership under a name other than your own, you must register the business name with the Alberta government.

If you're incorporating your business, the name is typically registered as part of the incorporation process.

In addition to registering your business name, you may also need specific permits or licenses depending on your industry. For example, food businesses require health and safety certifications, and construction companies need trade licenses.

Why it matters: Failure to properly register your business name or obtain the necessary permits can result in fines or legal issues down the road. For help with business registration, consider reaching out to a business lawyer.

3. Draft Shareholder or Partnership Agreements

If you have business partners or shareholders, it’s critical to draft a partnership or shareholder agreement. This agreement outlines each party’s roles, responsibilities, and contributions to the business. It also includes how profits and losses will be shared, how decisions will be made, and what happens if a partner wants to exit the business.

Why it matters: Having a written agreement in place can prevent misunderstandings and disputes among business partners. It also provides a clear plan for handling exit strategies, ownership transfers, and dispute resolution. Learn more about this topic in our guide to shareholder agreements in Alberta.

4. Obtain the Right Insurance Coverage

No matter how well you plan, unexpected events can happen. That’s why insurance is an essential part of protecting your business. In Alberta, small business owners should consider the following types of insurance:

• General Liability Insurance: Protects your business from claims of injury, property damage, or accidents that occur on your premises or as a result of your business activities.
• Professional Liability Insurance: Covers claims of negligence or failure to perform professional duties, especially important for consultants or service-based businesses.
• Property Insurance: Protects your business property, such as equipment, inventory, or office space, from damage or theft.

Why it matters: Without the right insurance, you could face financial devastation if something goes wrong. Speak with an insurance broker to determine the coverage best suited to your business needs.

5. Understand Your Tax Obligations

As a business owner, you’ll need to understand your tax obligations at the federal and provincial levels. In Alberta, businesses must comply with the following:

• GST Registration: If your business earns more than $30,000 annually, you must register for the Goods and Services Tax (GST) and charge it to customers.
• Corporate Taxes: If you’ve incorporated your business, you’ll be required to file corporate taxes annually. Corporations in Alberta are subject to both federal and provincial corporate tax rates.
• Payroll Taxes: If you hire employees, you must deduct and remit income taxes, Employment Insurance (EI) premiums, and Canada Pension Plan (CPP) contributions.

Why it matters: Failing to comply with tax laws can result in fines, penalties, and interest. It’s critical to consult with a tax advisor to ensure your business is meeting its tax obligations.

6. Create Contracts for Customers and Suppliers

To protect your business interests, it’s important to have clear and legally binding contracts in place with your customers, suppliers, and partners. Contracts outline the terms and conditions of your relationships, such as payment terms, service expectations, and confidentiality agreements.

Having well-drafted contracts can prevent misunderstandings, reduce the risk of disputes, and provide clarity in case things go wrong.

Why it matters: A legally enforceable contract provides clarity and helps protect your business interests. If you’re unsure about contract terms, a business lawyer can help draft or review your agreements.

7. Comply with Employment Laws

If you hire employees, you must comply with employment laws in Alberta, which cover topics like:

• Employment Standards: Alberta’s Employment Standards Code outlines minimum wage, overtime, vacation pay, and other worker rights.
• Workplace Health and Safety: Ensure your workplace meets health and safety regulations to protect your employees and prevent accidents.
• Employee Contracts: Draft clear employment contracts that outline expectations, compensation, benefits, and terms of termination.

Why it matters: Failure to comply with employment laws can lead to legal disputes, fines, or damage to your company’s reputation. For more information, you can check out our Employment Law Services.

8. Protect Your Intellectual Property

Your business may have valuable intellectual property (IP) that needs protection. Whether it’s a unique product, logo, or brand name, IP protection ensures that competitors cannot steal or copy your creations.

Consider registering trademarks, patents, or copyrights, depending on the nature of your business. This helps secure your brand and intellectual property from unauthorized use.

Why it matters: Without proper IP protection, others may use your innovations and profit from your hard work. To learn more about intellectual property protection, visit our Business Law Services.

Final Thoughts

Starting and running a small business in Calgary requires more than just a great idea. It’s essential to understand the legal requirements and set your business up for success from the very beginning. By following this legal checklist and consulting with professionals when needed, you can avoid common pitfalls and protect your business for the long term.

At Libra Law, we’re here to help guide you through the legal steps of starting and growing your business. Talk to a business lawyer today to ensure your business is legally protected and compliant with Alberta regulations.

Disclaimer:

This article is for general informational purposes only and does not constitute legal advice. For personalized assistance, please consult a lawyer or qualified professional.