Incorporation for startups and founders.

There's one catch worth knowing: a federal corporation must have at least 25% resident-Canadian directors (at least one if you have fewer than four directors). If your founding team is all Canadian-resident, that's a non-issue. If you have non-resident co-founders, it can be a real constraint, and in that case an Ontario corporation, which has no director-residency requirement since July 5, 2021, may actually be the more flexible choice.

Ontario (OBCA) incorporation is completely viable for a startup too, especially an Ontario-focused one, and costs $300. Many great companies started provincially and continued federally later. Don't overthink this at day one. Investors care far more about a clean cap table and clean paperwork than about which statute you incorporated under.

Clean means a small number of founders holding common shares in sensible proportions, clear vesting on founder equity, a defined (or reserved) option pool for early employees, and no loose promises of "a few percent" scattered around without paper. Every share issuance should be documented in the minute book. Avoid handing out equity casually before you incorporate. Verbal equity promises are one of the most common startup messes.

The practical takeaway: keep it simple and keep it documented from the first day. A tidy cap table is one of the cheapest advantages you can give your future fundraise.

Preferred shares typically enter the picture when you take real institutional investment. Investors buy preferred shares that carry protections common shares don't: a liquidation preference (they get their money back first in a sale), anti-dilution terms, and specific voting or veto rights. These are negotiated as part of a financing round and are drafted by the lawyers involved; you don't create them speculatively at incorporation.

The option pool is equity you reserve to grant to early employees and advisors, usually as stock options. Many startups reserve a pool (often in the 10–15% range) so they can hire with equity. You can set this up early or expand it at your first round, but plan for it, because investors will expect a pool to exist.

On naming: don't let the name hold up incorporating. A numbered corporation (e.g. 1234567 Canada Inc. or 1234567 Ontario Inc.) is perfectly acceptable to incorporate now, and you can adopt your real brand name later through a simple amendment once you've cleared trademarks and locked the domain. Investors don't care that you started numbered. Getting incorporated cleanly, early, matters more than the name on the certificate.

One more note: incorporating early gives you a clean cut-off for intellectual property: you want the company (not the founders personally) to own the code and IP, assigned in from the start. That's another thing your future investors' lawyers will check.

Bring in a startup lawyer for the things that are genuinely legal and negotiated: a founders' or shareholders' agreement with real vesting and leaver provisions, your first priced financing (the preferred-share terms, the SAFE or convertible-note documents), option-plan drafting, and IP assignment beyond the basics. These aren't form-filling: they're negotiated instruments, and good ones save you far more than they cost when you raise.

A sensible sequence: incorporate cleanly now (CorpStart handles this), put a founders'/shareholders' agreement in place with a lawyer early, and loop the lawyer back in when a real financing appears. That keeps your legal spend proportional to your stage.