Registering a business without actually doing business?

Question

Apologies for the silly question but I don't really have any background in terms of businesses or any legal matters.

I am paying for an online service that provides many features, some of which are only available if I verify my account. The verification process though asks for the following fields:

• Legal Company Name
• EIN or Registration Number
• Country of Incorporation
• State of Incorporation

Just to clarify, I am using this online service for personal use but some of the features I am paying for are meant for businesses and I'm actually interested in using them for my personal use. I'm just wondering if it's possible for me to simply register a business based in Calgary without actually doing business just so I could verify my account and use those additional features?

I saw this page from the Calgary website (city I reside in) and it seems like the simplest solution for me (home occupation class 1). No fees involved and no expiry. Although I'm not sure if that's all I need.

What's the simplest (and most importantly cheapest) solution for me to do so I can get a business registration number for what I'm trying to achieve?

I also found Ownr which let's me pay CAD $49 (one time fee) to register a sole proprietorship which would give me a business registration number but I'm not sure how legitimate they are or if that's really all I need. I would also prefer not to have to pay but $49 is something I would do. I just don't want to spend hundreds or thousands.

Can anyone help me figure this out? What are some of the things I need to consider if I'm going to go ahead with registering a business without actually doing business? Any pitfalls? Do I need to worry about filing taxes even if I don't get any revenue/expenses as I won't really be doing any business activities?

Answer 1

Jurisdiction: england-and-wales

This could technically amount to fraud as you are misrepresenting yourself as a business in order to gain something you wouldn't have otherwise been able to gain, when in fact the business is a sham.

Aside from that, there is no requirement that companies must trade. Companies which do not trade are known as dormant companies and are defined at Section 1169 of the Companies Act 2006. It is perfectly legitimate to create and own a dormant company for as long as you wish, so long as you comply with annual filing requirements. That includes the duty to file an annual confirmation statement and to file annual (dormant) accounts.

I also found Ownr which let's me pay CAD $49 (one time fee) to register a sole proprietorship

A sole proprietorship is not a company; it's merely you as an individual operating as a business. As such, it doesn't have a "legal company name", nor a "country of incorporation" or "state of incorporation" since it isn't a corporation.

Any pitfalls? Do I need to worry about filing taxes even if I don't get any revenue/expenses as I won't really be doing any business activities?

Yes, there is a pitfall. The parties to the contract will be the service provider, and your company. Therefore your premise that there are no "revenue / expenses as I won't really be doing any business activities" is wrong. It will be the company purchasing the services and then reselling them (or gifting them) to you. Accordingly, your company will no longer be dormant and will be subject to the usual accounting and tax rules that apply to trading companies.

There are ways around this; for example the company can act as your agent for the purposes of entering into the contract and, provided that you pay for the services from your personal funds, the company may still be able to remain dormant. You would probably also need to inform the service provider of the agency arrangement as undisclosed principals can result in a deemed contract between the service provider and the agent. This scenario is definitely more complicated than merely setting up a company and you should probably seek legal advice.