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How can I add my wife as a director for a new incorporated business?
Expert: Joe Milstone
Peter asked:
I have a new incorporated business but how do I add my wife as a Director? Am I allowed to add in additional services that I now offer into this business. Do I have to collect HST even though I have yet to make $30,000 for the year?
Joe Milstone answered:
Obviously there are three discrete questions here. In order of appearance:
If the corporation is an Ontario corporation, shareholders resolutions should be passed by the voting shareholder(s) to increase the fixed number of directors (within the minimum and maximum set out in the Articles of Incorporation) (if applicable) and elect the new director. The new director should sign a Consent to Act as a Director within 10 days of her election as a director. In addition, a Form 1 Notice of Change under the Corporations Information Act (Ontario) is required to be filed with the Ontario Ministry of Government Services to report the change in the board of directors (within 15 days of the change taking place).
The corporation should be able to offer new services as long as the Articles of Incorporation don't restrict the business that the corporation may carry on and as long as the nature of the new business to be carried on isn't regulated by a specific profession (such as engineers, lawyers, doctors, accountants, etc.). In addition, the corporation may need to apply for and obtain specific licences or permits in order for it to carry on any new business activities which are regulated.
The general trigger for mandatory HST registration is when one's total worldwide taxable supplies of goods and services exceed $30,000 in a single calendar quarter or in four consecutive calendar quarters. However, even if the corporation is not required to register for HST, it may still be appropriate to voluntarily register, particularly where customers will be somewhat ambivalent as to whether they are charged HST, because the corporation would then be eligible to claim input tax credits (which could possibly be a significant cost saving to the corporation). Certain rules and considerations apply to specific businesses and industries, so this is something that should be discussed in greater detail with a specialized financial advisor such as an accountant.
About the author
Joe Milstone is co-founder of Cognition LLP, an innovative legal services provider offering in-house and corporate counsel services without the overhead or cost structure of a traditional business law firm. Cognition enables companies without their own general counsel to have a dedicated, experienced counsel as part of their team on an affordable, as-needed basis, or permits existing general counsel to more efficiently channel overflow and outside legal work without increasing headcount or exceeding budget.
