Canadian Startup Legal Checklist: What You Actually Need

Stage 1: Incorporation (Day 1)

Start by incorporating your company. Most Canadian tech startups incorporate federally or in their home province. Federal incorporation costs $200 online ($250 by mail) plus annual filing fees. Provincial incorporation costs vary by province ($300-$500). Federal incorporation allows you to operate nationally under one name, while provincial incorporation is simpler but requires extra-provincial registration to operate in other provinces.

Stage 2: Founder Agreement (Week 1)

If you have co-founders, create a founder/shareholder agreement immediately. This document defines ownership splits, vesting schedules, decision-making authority, and what happens if a founder leaves. Most founder disputes arise from not having this agreement in place, or having vague verbal agreements that founders remember differently.

Stage 3: IP Assignment (Week 1)

Every founder, employee, and contractor must sign an IP assignment agreement transferring all IP rights to the company. This is non-negotiable for fundraising—investors will require proof that the company owns all its IP. If you discover during due diligence that a co-founder or early contractor didn't sign an IP assignment, you'll need to track them down and get a retroactive assignment, which is expensive and risky.

Stage 4: First Hire (Month 1-3)

When you hire your first employee or contractor, you need proper employment or contractor agreements. Don't use verbal agreements or informal emails—these create ambiguity and risk. Employment contracts should include compensation, benefits, IP assignment, confidentiality, non-solicitation, and termination provisions. Contractor agreements should clarify the independent contractor relationship and include IP assignment.

Stage 5: First Customer (Month 3-6)

Before signing your first customer, you need Terms of Service, Privacy Policy, and potentially customer contracts (for B2B). Terms of Service define the legal relationship with users. Privacy Policy explains how you collect, use, and protect personal information (required by PIPEDA). Customer contracts (for B2B SaaS) define service levels, payment terms, liability limits, and termination rights.

Stage 6: Fundraising (Month 6-12)

Before fundraising, clean up your corporate records, cap table, and IP assignments. Investors will conduct due diligence and expect organized, complete records. For the fundraising itself, you'll need a term sheet, subscription agreement, shareholders agreement, and various supporting documents. This is where you should hire a lawyer—fundraising documents are high-stakes and require negotiation expertise.

Ongoing Compliance

After incorporation, you have ongoing compliance obligations. File annual returns with the corporate registry ($20-$40/year). File annual tax returns even if you have no revenue. Maintain corporate records including board minutes, shareholder resolutions, and share certificates. Keep employment records for terminated employees (varies by province, typically 3-6 years). Renew business licenses and permits as required.

Total First-Year Legal Budget

A typical Canadian tech startup should budget $10,000-$30,000 for legal costs in the first year, allocated as follows:

• Incorporation and setup: $500-$2,000
• Founder/shareholder agreement: $500-$5,000
• Employment and contractor agreements: $300-$1,000 (templates for 3-5 people)
• Terms of Service and Privacy Policy: $200-$3,000
• Fundraising (if applicable): $10,000-$30,000
• Miscellaneous legal advice: $1,000-$5,000

This budget assumes a hybrid approach: using templates for routine documents and hiring lawyers for complex situations like fundraising and founder disputes.

The Bottom Line

Canadian startups have predictable legal needs at each stage: incorporation, founder agreement, IP assignment, employment contracts, customer terms, and fundraising documents. Budget $10K-$30K for the first year, using templates for routine documents and lawyers for high-stakes situations. Don't skip IP assignments—investors will require proof you own your IP. Maintain organized corporate records from day one to avoid scrambling during due diligence. By following this checklist and allocating your legal budget strategically, you can handle legal requirements efficiently without overspending or creating gaps that cause problems later.