What Legal Documents Do You Need When Starting a Business in Ontario?

Starting a business in Ontario usually means juggling a long list of tasks, and paperwork is often near the top of that list. Beyond registering your business name or incorporating, there are several legal documents that new business owners may want to have in place before they open their doors or sign their first client.

Below, we walk through some of the common documents that may come up when starting a business in Ontario, along with a few reasons it is generally worth having a lawyer review these before you rely on them.

Incorporation Documents

If you are incorporating your business, whether provincially in Ontario or federally, you will generally need articles of incorporation, corporate bylaws, and organizational resolutions that set out things like the initial directors, officers, and share structure. These documents form the legal foundation of the corporation, so it is usually worth having them prepared carefully rather than relying on a generic template that may not fit your situation.

Depending on the facts, you may also want a minute book to keep track of these records, along with any share certificates and registers that your corporation is expected to maintain going forward.

Shareholders' Agreements

If your business has more than one owner, a shareholders' agreement may help set out how decisions get made, how shares can be transferred, and what happens if a shareholder wants to leave the business or if the owners disagree on a major issue. Without an agreement like this, disputes between shareholders can sometimes become harder to resolve, since there may be no clear roadmap for how to handle them.

In some cases, business partners assume that a verbal understanding is enough, but a written shareholders' agreement can help reduce the risk of misunderstandings down the road.

Contracts With Clients and Suppliers

Depending on the nature of your business, you may need contracts with customers, clients, suppliers, or contractors. These may include service agreements, sales terms, supply agreements, or independent contractor agreements. Having clear written terms may help set expectations around pricing, timelines, and what happens if something goes wrong, rather than relying on informal arrangements.

Employment Agreements

If you plan to hire staff, written employment agreements are generally a good idea. These may address matters such as job duties, compensation, termination provisions, and confidentiality obligations. Ontario employment standards can be complex, and an employment agreement that does not comply with applicable requirements may not hold up the way an employer expects. Because of this, it is generally worth having employment agreements reviewed before they are used.

Privacy Policies

If your business collects personal information from customers, whether through a website, an app, or in person, you may need a privacy policy that explains what information is collected and how it may be used. Depending on the facts, other privacy related documents, such as consent forms or data handling procedures, may also be relevant, particularly for businesses that handle sensitive information.

Commercial Leases

If you are renting space for your business, the commercial lease is often one of the most important documents you will sign. Commercial leases can differ significantly from residential leases and may include terms around rent increases, maintenance responsibilities, renewal options, and what happens if you need to leave before the lease term ends. Depending on the facts, some lease terms may be negotiable, so it is generally worth having a lawyer review a commercial lease before you sign it.

Putting the Pieces Together

Every business is different, and the documents you may need can depend on your industry, how your business is structured, and how it plans to operate. In some cases, additional documents, such as partnership agreements, licensing agreements, or intellectual property assignments, may also be relevant.

If you are starting a business in Ontario, it is generally a good idea to speak with a lawyer early in the process, so that the documents you rely on are suited to your specific circumstances.

Frequently Asked Questions

Q: Do I need a lawyer to start a business in Ontario?

A: Not always, but depending on the facts, a lawyer may help you understand which documents apply to your situation and may help reduce the risk of issues later on, particularly if your business has more than one owner or plans to hire staff.

Q: What is the difference between incorporation documents and a shareholders' agreement?

A: Incorporation documents generally establish the corporation itself, while a shareholders' agreement sets out how the owners will manage the business and handle situations such as disagreements or a shareholder leaving. Many businesses with more than one owner may benefit from having both.

Q: Do small or home based businesses need a privacy policy?

A: It may depend on the facts, including whether the business collects personal information from customers. If personal information is collected, in some cases a privacy policy may be advisable regardless of the size of the business.

Q: Can I use a template for my employment agreements or commercial lease?

A: Templates may be a starting point, but depending on the facts, a template that does not reflect current Ontario requirements or your specific arrangement may not offer the protection you expect. It is generally a good idea to have these documents reviewed by a lawyer before they are used or signed.

Contact DevLaws

If you are starting a business in Ontario and want help understanding which legal documents may apply to your situation, the team at DevLaws can help. Contact DevLaws today to schedule a consultation and talk through your specific plans.

contact@devlaws.com | +1 437 290 0424 | devlaws.com

Disclaimer

This article is provided for general information purposes only and does not constitute legal advice. It is not intended to create a lawyer-client relationship. Laws and regulations can change, and the information here may not reflect the most current developments. Every situation is different, and the information in this article may not apply to your specific circumstances. If you are starting a business in Ontario, you should consult a qualified lawyer, and where relevant an accountant, for advice tailored to your situation. DevLaws does not guarantee any particular outcome or result.