Most popular business types
The simplest and least expensive type of business structure. You are the business and own 100% of it. Disadvantages:
- exposure to unlimited liability.
Teaming up in a limited partnership is a great option if you want to attract investors while retaining management of the business and having the flexibility of a partnership.
Corporation is a separate legal entity that can shield the owners from personal liability and company debts. It offers credibility, tax benefits & clear governance requirements.
Our business formation or incorporation service incudes:
We can do a preliminary check to see if your proposed business name is available. Then, we can reserve it for you.
We can prepare your registration documents and file them with the registrar in the selected jurisdiction.
Throughout the process, you have access to a designated customer service. If you have questions before or after, we are here to assist.
When you incorporate, the business becomes a separate legal entity from yourself as the business owner. You can enter into contracts in the name of the corporation instead of taking that liability on personally.
FEDERAL OR PROVINCIAL CORPORATION?
A corporation may be created under either federal or provincial law. The decision of which jurisdiction to incorporate under typically depends on:
- the jurisdiction(s) in which the business will operate;
- director residency requirements;
- corporate name requirements and
- maintenance cost.
If your company intends to carry on a business across all the provinces and subject to federal regulation, you may wish to incorporate under federal law. In addition, particular local nuances in the provincial statutes may result in a foreign investor favouring federal incorporation.
If a company intends to operate in more than one province or territory, it will need to register in each province and territory in which it conducts business, regardless of the jurisdiction of incorporation. This process is called an extra-provincial registration.
|Foreign investors must consider residency requirements.|
|Federal Corporation & Ontario Provincial Corporation: At least 25 per cent of directors must be resident Canadian. Where there are fewer than four directors, one director must be resident in Canada.
Important: there is no residency requirement for directors of corporations established in British Columbia, Nova Scotia, New Brunswick, and some other provinces. Each province has different residency requirements that investors wishing to incorporate in Canada should consider.
Similar to sole proprietorships, partnerships are not a separate legal entity from the owners of the business, and there is no distinction between the business entity and the owners. Like sole proprietorships, partners are personally responsible for the obligations of the business.
General or Limited Partnership?
In a general partnership, each partner is liable for the debts and obligations of the business on an unlimited basis. You and your partners have shared responsibility for losses, and profits are divided among all the partners.
A limited partnership is like a general business partnership, but it offers limited liability protection to some partners (“limited partners”). At least one partner must be a general partner—who faces unlimited personal liability. The others can be “limited partners” who can have no say in the business, but who don’t have personal liability.
|General partners||Limited partners|
Teaming up in a limited partnership is a great option if you want to attract investors while retaining management of the business and having the flexibility of a partnership. However, please note that limited partnership offers limited risks for investors, not active owners.
Choosing to do business as a sole proprietor is your simplest option, and the one that many small business owners choose. It’s the most commonly selected structure and the easiest to set up.
The advantages of going solo include:
- You have the freedom to take full control and make all the decisions without anyone else.
- There are few costs to set it up.
- You get some tax advantages, such as the ability to deduct losses and expenses from your personal income.
- You earn all the profits.
There are also some perceived disadvantages of becoming a sole owner, such as:
- You are accountable for all parts of your business – meaning debts and losses are your own.
- A creditor can claim your personal assets as well as the business if you don’t pay a debt.
It’s the most straightforward way to structure your business, less paperwork, and you can be up and running immediately. You can also decide later to change the structure as your business grows.
However, some requirements, such as licensing and business name registrations, will still apply. This structure is best suited for small enterprises, as all benefits and liabilities of the business flow through to the individual.
One shortcoming is that the liability of the enterprise is the same as the liability of the individual operating the business. Unlike a corporation, assets of the sole proprietor are at risk in honouring the liabilities of the business. Another shortcoming is that opportunities for tax planning are limited, as the profits of the business flow through to the individual and are taxed in his or her hands.