Most small business owners incorporate with a simple setup: one class of common shares, issued to themselves, and nothing more. It works. But it can quietly limit your options later.

To understand why, it helps to start with the basics.

Shares represent ownership in your company. The most familiar type is common shares. If you hold common shares, you usually have the right to vote and to share in the profits and growth of the business.

Companies can also create other classes of shares with different rights attached to them. One common example is what people usually call “preferred shares.”

That name is just a convention. Legally, there is no special category called “preferred shares.” Instead, it is a class of shares with a bundle of rights that give the holder certain preferences over common shareholders. For example, they might receive dividends first, be paid first if the company is sold, or have limited or no voting rights.

In practical terms, this type of share lets you separate economics from control. Someone can have a financial interest in your business without having a say in how it is run.

These types of shares are commonly used in specific technical ways. For example, they are often used when transferring assets into a company, where the contributor receives shares with defined value and rights in return. They can also function as a shareholder-loan type vehicle, where funds are advanced to the company in exchange for shares that carry repayment or redemption features instead of traditional debt terms.

Your common voting shares can also be structured to give you more flexibility.

It is often good practice to give each key shareholder their own class of shares, at least where there are only a few owners. That does not change ownership percentages by itself, but it gives you flexibility to treat shareholders differently later if needed. For example, you can declare dividends on one class without declaring them on another.

Alongside that, it is common to include one or two additional flexible classes that can be used in the future, whether for investors, family members, or planning purposes.

So why include these extra classes if you are not planning to use them?

Because it is much easier to include them at the start than to add them later.

You can amend your Articles in the future to create new classes of shares. It’s not always the most onerous process in the world, but it does involve legal work, cost, and often shareholder approvals. By contrast, including a few extra classes at incorporation typically adds little or no additional cost, and it keeps those options open from day one.

It is also worth thinking about how this plays out in practice. Adding preferred shares or additional common share classes might mean nothing to you today. But if your accountant asks for them later as part of a tax plan or restructuring, that is when they become useful. Having them already in place makes that conversation much simpler.

For most small business owners, that is the point. You may never use them. But if you need them, you will want them ready.