Corporation, Partnership, or Sole Proprietorship? 
Corporation, partnership, or sole proprietorship?
Now that you have decided to start your own business, you will have to determine what business structure or form of organization suits your needs. The structure of your business will depend on whether you want to run your business yourself or with a partner or associates. There are four types of business structures: sole proprietorships, partnerships, corporations and cooperatives.
On this page: 1. 1. Sole proprietorship 2. 2. Partnerships 3. 3. Corporations 4. 4. Cooperatives
1. Sole proprietorship↑Top
With this type of business organization, you would be fully responsible for all debts and obligations related to your business and all profits would be yours alone to keep. As a sole owner of the business, a creditor can make a claim against your personal or business assets to pay off any debt.
Advantages:
* Easy and inexpensive to form a sole proprietorship (you will only need to register your business name provincially, except in Newfoundland and Labrador) * Relatively low cost to start your business * Lowest amount of regulatory burden * Direct control of decision making * Minimal working capital required to start-up * Tax advantages if your business is not doing well, for example, deducting your losses from your personal income, lower tax bracket when profits are low, and so on * All profits will go to you directly
Disadvantages:
* Unlimited liability (if you have business debts, personal assets would be used to pay off the debt) * Income would be taxable at your personal rate and, if your business is profitable, this may put you in a higher tax bracket * Lack of continuity for your business, if you need to be absent * Difficulty raising capital on your own
2. Partnerships↑Top
A partnership would be a good business structure if you want to carry on a business with a partner and you do not wish to incorporate your business. With a partnership,
Now that you have decided to start your own business, you will have to determine what business structure or form of organization suits your needs. The structure of your business will depend on whether you want to run your business yourself or with a partner or associates. There are four types of business structures: sole proprietorships, partnerships, corporations and cooperatives.
On this page: 1. 1. Sole proprietorship 2. 2. Partnerships 3. 3. Corporations 4. 4. Cooperatives
1. Sole proprietorship↑Top
With this type of business organization, you would be fully responsible for all debts and obligations related to your business and all profits would be yours alone to keep. As a sole owner of the business, a creditor can make a claim against your personal or business assets to pay off any debt.
Advantages:
* Easy and inexpensive to form a sole proprietorship (you will only need to register your business name provincially, except in Newfoundland and Labrador) * Relatively low cost to start your business * Lowest amount of regulatory burden * Direct control of decision making * Minimal working capital required to start-up * Tax advantages if your business is not doing well, for example, deducting your losses from your personal income, lower tax bracket when profits are low, and so on * All profits will go to you directly
Disadvantages:
* Unlimited liability (if you have business debts, personal assets would be used to pay off the debt) * Income would be taxable at your personal rate and, if your business is profitable, this may put you in a higher tax bracket * Lack of continuity for your business, if you need to be absent * Difficulty raising capital on your own
2. Partnerships↑Top
A partnership would be a good business structure if you want to carry on a business with a partner and you do not wish to incorporate your business. With a partnership,