We often get asked about what costs are associated with being incorporated, aside from the initial start-up fees. This is an excellent question, as you will want to factor this into any decision to incorporate and your ongoing business budgeting.
First, it will be necessary to keep your minute book up-to-date. Corporate law requires that companies have yearly meetings of both the shareholders and directors to do a number of things including re-electing the directors and officers, approving the yearly financial statements, and exempting the company from the requirements of an audit (if applicable). If a company has only one or two shareholders, instead of holding a meeting, resolutions can be prepared and signed by all of the shareholders and all of the directors of the company. Most corporate lawyers provide their clients with a yearly corporate maintenance service. There is usually a small fee associated with this service, which varies from firm to firm but is usually under $500 for basic annuals (at least in Simcoe County, Muskoka and Georgian Bay!). The law firm will contact the company’s accountant and inquire as to whether any management bonuses or dividends have been declared. The appropriate resolutions are then prepared and, if there have been any changes to things like the directors or the registered office, they will file the applicable forms providing the government with notice of these changes.
The second ongoing cost will be the accounting fees. You will have an additional corporate tax return to file yearly and usually financial statements to prepare. Your accounting fees will therefore likely be higher. You should speak with your accountant about this so that you are able to do a complete cost-benefit analysis. Finding out about not only the upfront costs but also the ongoing costs of incorporating is just good business.