Incorporating a co-op is a huge step towards making your business a reality. And it’s exciting! Once incorporated, your business is its own legal entity that can do things like open a bank account, raise money, buy property — all the things you need to do to get up and running. Incorporating also gives the co-op’s members limited liability (more on that here).  

At Co-operatives First, we think co-ops should incorporate sooner rather than later. The process is fairly straightforward: just fill out some forms and send them to the government. Easy, right? 

Yes – but in our time helping co-ops get started across western Canada, we’ve noticed some common mistakes people make that delay their incorporation. Incorrectly filling out a form, missing a step, or not following the guidelines to a T can mean having your application sent back for revisions.  

Here are the top five errors people make in their incorporating documents: 

1. Choose a bad name 

The incorporation process begins when you file a request to reserve the co-op’s name. At this point, groups often make one of three mistakes. First, they forget to include some version of the word “co-operative” in their name or miss another required word like “inc.” or “limited”. Second, they don’t include a description of their business in the name. For example, if you call a producer-owned farmer’s market something like “Green and White Cooperative” you can bet the registrar won’t be happy. Finally, they choose a name that isn’t unique. If your name is too similar to another co-op or doesn’t contain a distinct word or phrase, you’ll probably have to try again. Check out this resource for some tips on choosing a name for your co-op.  

2. Overthink the ownership structure 

Groups can find it challenging to figure out their ownership (i.e. membership) structure. To incorporate, you’ll need to decide who can be a member of your co-op and what they need to do to qualify for membership. A common mistake is including too many groups that may not be involved with the project. For example, a producer-owned farmers’ market might want to include a member class for its customers. In some cases, this multi-stakeholder approach can work well, but it’s usually best to keep it simple. A good rule of thumb is for the members to be the people involved at the time of incorporation.  

3. Over- or under-value membership 

This one’s pretty understandable. Without knowing exactly how much money you need to raise or how much value your members will receive, it can be hard to put a price on membership. However, a common mistake is charging too little for a membership. This likely means you’ll fail to raise enough money from your members, and you’ll have to find that money elsewhere or delay your progress. However, groups can also overestimate how much they should charge members. This can put people off and grind a membership drive to a halt. Consult an expert with experience helping co-op start-ups to pick the perfect price point (like us!).  

4. Be too idealistic when creating bylaws 

Remember that not everyone will share our enthusiasm for policy, procedure, and member meetings — and that setting quorum for annual general meetings at 80% will likely lead to problems down the road. Building bylaws means finding a balance between completing required tasks and the realities of bringing together your busy team. Asking someone with some experience in this field for assistance will help you build a set of bylaws that checks all the boxes without getting bogged down in corporate protocols.  

5. Be unaware of industry tricks when it comes to incorporating 

If this is your first time incorporating a co-op, there are some tricks of the trade you might not be familiar with. For example, there’s a glitch in the Saskatchewan filing system and clicking the wrong box might prevent you from submitting your application to incorporate. And, if you’re filing your incorporation in BC and you want to apply for grants, there are a few provisions you should include that aren’t mentioned in their instructions.  But don’t worry — our experience and insider knowledge can help.

Incorporating a co-op can be a tricky process. But it’s a critical step in your start-up journey. That’s why we make incorporation as straightforward and painless as possible. For just $400, we’ll help you craft your incorporating documents and file them with the government, so you can focus on building your business.  Click here to get started today!