The 4 Yearly Obligations of Corporations

We’ve seen it one too many times. Start-Ups will incorporate their company, get to work on building their vision and put everything else on the back burner. Either for lack of business activities, lack of time or lack of thought, some things will slip through the cracks and sooner or later corporations are slapped with penalties or even worse, their businesses radiated from the registry.

As such, we compiled a short list of the most important yearly obligations of a business. From filing your taxes, to filing your annual return to updating your minute book. Completing these requirements every year will ensure that your business does not have to pay additional penalties, taxes or even more so, ensure that your business stays alive.

Here’s what you should be doing each year:

1. Preparing the financial statements and filing the corporate tax return

Whether a corporation has made money or not, every corporation has the obligation to prepare yearly financial statements and file their corporate tax return accordingly at both the provincial and federal governments within six months of their year end date.

Additionally, corporations must ensure they have paid their corporate taxes within three months after their financial year end. Should a corporation fail to file or pay their taxes on time, the provincial and federal governments will begin charging both interest and penalties on the corporation.

2. File the Sales Tax Return (GST/QST)

Similarly to their corporate tax returns, corporations must also ensure that they have paid off their sales tax, namely their GST and QST. Corporations collect sales taxes on behalf of Revenue Quebec and Revenue Canada during each of their sales. As a rule, should a corporation fail to remit that sales tax to the appropriate entity within the stipulated delay, they will be charged with a hefty penalty from the government.

3. File the annual return at the corporate registry

Regardless if a corporation has had business activities or not and whether there were any changes the business or not, every corporation that is registered federally or provincially has the obligation to file their annual return at the corporate registry.

If a corporation is registered at the provincial level, they have the obligation to file an annual declaration with the Registre des entreprises du Quebec. Should the corporation fail to file the annual declaration within six months of their corporation’s anniversary date, the registry will impose a penalty.

What is more, should a corporation still fail to file their annual declaration within a period of two consecutive years, the Quebec enterprise registry has the right to dissolve the business – which essentially means that the business will no longer exist. In this case, the only way for the corporation to bring their business back to life would be to file a business revival.

In order to conduct a business revival, the corporation will have to pay off all of its penalty fees, file all the annual declarations that are due and file a request for revival and pay the 200$ fees associated therewith. For more information on business revivals, you can visit our business revival page here.

On the other hand, if a corporation is registered at the federal level, they have the obligation to file two annual returns. First, the corporation will have to file an annual return at Corporations Canada and pay the 20$ filing fee. The corporation will then have to file their annual declaration at the Registre des entreprises du Quebec.

At the federal level, should a corporation fail to file their annual return within a period of two consecutive years, the federal government has the right to dissolve the business. Once the business is dissolved, the corporation will have to revive the business by paying off all of its penalty fees, filing all the annual returns that are due, filing the “Form 15 – Articles of Revival” and paying the fees associated therewith at the registry.

4. Update the corporation’s minute book

The last yearly obligation of a business is to update their minute book with the appropriate resolutions and documents, namely:

1. Each year the corporation will have to file an annual resolution into its minute book that re-elects the directors of the corporation and ratifies the financial statements of the corporation

2. The corporation will have to update their minute book with any changes made in the corporation’s structure since the previous year. These changes can range from the share structure, to changes in the directors, shareholders, head office, name…etc. For a list of the types of changes that can be made in a corporation, please visit our corporate resolutions and minutes page.

3. The corporation will have to ensure that their director’s list, shareholder’s list, by-laws, securities registry and share certificates are properly updated each year to reflect any changes in the shareholders, shares or directors.

This last obligation is often times the most overlooked obligation of a business. Most start-ups will not update their minute book and will find themselves years after trying to sell their business, being audited by government…etc. and not having a proper minute book to provide the government entity or business. Having a proper updated minute book from the beginning of a corporation’s existence is an essential and vital for every business.

With all that being said, keeping up with all these obligations can sometimes become a hassle for businesses. As such, we have created a corporate maintenance package for businesses who wish to run their obligations on autopilot. We ensure that your business complies with all its legal obligations, file your annual returns, update your minute book and securely store it at our office. For more information on our corporate maintenance package, please visit our corporate maintenance page here or contact us.