When registering your small business, there are a number of different business structures you can utilize. Different business structures offer different benefits and drawbacks. In most cases, one should always register as a corporation to limit personal exposure to liabilities, unless some restriction applies. Here are a brief comparison of different company structures:
- This business structure has the simplest form of tax filing.
- There are no double taxes that corporations can sometimes face.
- Sole proprietors are responsible for all business debts. There is no legal separation between you and your business.
- You have the most control over your business if you choose to register your company as a sole proprietorship.
- Starting a sole proprietorship is cost-efficient as there are few initial fees to pay.
- The business is only operational as long as the owner is alive and active. This is different than corporations that can live on after the owner has retired.
- Partnerships are similar to sole proprietorships; the main difference being there is more than one owner.
- You and your partner are equally responsible for all business debts.
- You are also legally responsible for any action your partner takes.
- You can have a partnership without a written agreement.
- A partnership is also more cost-effective because there are few initial fees to pay when registering your company.
Limited Liability Partnerships (LLP)
- LLPs are partnerships where the liability of the owners is limited.
- LLPs are reserved for partnerships among specific groups of professionals including lawyers, accountants and doctors.
- Each province governs regulations for LLPs.
- If something goes wrong in an LLP the partnership and assets of the partner who did something wrong can be sued but the other partners and their assets are protected.
- Corporations are a separate legal entity so business owners will not be personally responsible to pay off business debts.
- Corporations are more expensive to run as there is the possibility your income could be taxed twice.
- By incorporating your business, you are selling shares or stake in your business.
- This business structure makes it easier to transfer control and ownership of a corporation.
- Laws governing corporations are more complex than those governing partnerships or sole proprietorships.
- Some government assistance is only available to corporations.
To learn more about business structures, read this Canada Business Page.
Having trouble registering?
In most cases, an agency or lawyer is not required for business registration. Registering and incorporating can be done simply by following the clear instructions on government website. Nonetheless, should you face any difficulties in the registration process, contact us and our consultants will be happy to help you complete the process for a small commission.
1800 956 6897
- Co-ops have a board of directors and elected officers much like a corporation.
- Co-ops are only taxed once, unlike corporations.
- Shareholders are also members and users of the business, not just part owners. This means shareholders have voting power and control over who is elected to the board of directors.
- Even if one investor has made a large contribution they cannot dominate the decision making process.
- Co-operatives don’t provide incentives for large contributions from investors or members.
- Co-ops are generally democratically controlled by the people that use its services and products.
- To learn more about co-operatives read this Canada Business co-operative info guide.
Provincial vs. Federal Business Registration
In addition to choosing a business structure, you must choose whether to register
your business provincially or federally. Provincial registration is ideal for partnerships, sole proprietorships or corporations only doing business in one province. Federal registration is ideal for businesses looking to provide products or services nationally.
At Winflow Financial Group, our consultants help entrepreneurs with our experience. Tell us about your business or investment today and find out how we can help your business save money and grow.