You know the importance of staying up-to-date in your business. If you carry inventory, you rely on careful monitoring to ensure that your supplies are up-to-date. If you deal in any perishable items, you’re checking dates continuously. If you are offering any sort of professional services, you make sure that you are staying up-to-date on your industry and best practices, and in some cases it may even be required by your governing body. 

So why do we forget to keep our business up-to-date?

As a business owner you usually have too many things needing your attention between sales, marketing, operations, strategy, quality control, etc. As a result, worrying about legal compliance is usually the last thing on your list of priorities, if it’s even there at all. Yet forgetting about it entirely can become a very expensive mistake.

Here are a few things to watch for to make sure that your business stays in shape, and how working with a business lawyer can help.

Minute Book

When’s the last time that you’ve even thought about your corporate minute book? Remember that fancy hard-bound binder with the shiny nameplate on it that has your corporate name or number proudly displayed. Inside that book are key documents that govern your corporation, including your officers, directors, shareholders, corporate by-laws, and corporate resolutions. 

That book may look nice on a shelf, but it’s more than just decorative, and it shouldn’t be collecting too much dust either. Businesses are legally required to update their minute books annually in order to stay compliant. Failure to do so can have serious consequences including fines, and potentially even prison time.

Did you know that your corporate charter could actually be cancelled for not updating your minute book? You also risk an audit by the CRA, and serious penalties under the Ontario Business Corporations Act. The penalties can include $2,000 fines for individuals, $25,000 fines for corporations, or even one year in prison (although that is certainly rare). 

There are other reasons to keep your minute book up to date as well. What if circumstances in your life change unexpectedly, and you find yourself needing to sell the business quickly? If you’re looking for a buyer, their due diligence will mean going through all of your financials, including your minute book. Keeping it current can save you the headache of having to scramble to put everything together at the last minute.

Annual Returns

Whether you are incorporated provincially or federally, you need to file annual returns every single year. Your annual return is like your annual check-in with the government to confirm that all of the information on file for your corporation is current and correct. 

Annual returns are fairly simple and straightforward. You’re essentially confirming your business name and address, the names and addresses of all directors and officers of the corporation, the business’ primary activity, and your primary email and phone number. If nothing has changed in the past year then this may be uneventful, and if something has you are responsible for filing a separate Notice of Change. 

If you’ve had a longstanding Ontario corporation and were used to filing your returns along with your taxes, the law changed just over four years ago. You can no longer file your returns along with your T2s, and CRA will no longer send your information onto the Ontario Business Registry on your behalf. If you assumed this was being done for you, then it likely has not been done for some time. 

If you fall behind on your annual returns, the penalties are similar to falling behind on your minute books. You could be classified as not being in good standing, have your corporation fined up to $25,000, and even have your corporation cancelled. Realizing this has happened, and working to unscramble the egg, is much more expensive and stressful than simply staying up to date in the first place.

Contracts and Policies

Under some workplace policies, such as your workplace bullying and harassment policy, you are legally required to review and revise your policies annually. For any workplace policies that you have though, a regular review is always a smart practice. What if you have a policy in place that you realize is no longer working for your business?

If your policies were based around everyone working in the office every single day, then the COVID lockdowns likely upended every single process that you had in place. If you’ve since moved to a hybrid working model, then you’ve needed to rejig things again. Emergencies happen, of course, but they are much easier to handle when your policies are up-to-date. The law also frequently requires employers to add new policies, such as more recently, an electronic monitoring policy, if your business is of a certain size.

You may not need to overhaul all of your employment contracts annually, but they are definitely worth an annual review. Court cases frequently change the language required to protect your business, and these contracts need to be written with great precision in order to survive a court battle. If you need to let someone go, and your contract is not up to the latest legal standards, you may be left to pay significantly more in termination pay than you bargained for.

How We Can Help

One of the best ways to stay compliant is to forge a great relationship with your business lawyer. Yes we can help when you’re in trouble, but we can also be partners in your success year-round! That means ensuring that things are up-to-date and that you’re well protected at all times for whatever comes your way.

We love being part of the community, and we love the opportunity to be part of your team. Connect with us today to learn more about how we can help.