If you are in process of starting your business, you need to know which organization structure meets your needs and aligns with your business goals and objectives. Generally, there are three types of business structures: Sole Proprietorship, Partnership and Corporation.
SOLE PROPRIETORSHIP: The Sole Proprietorship is the simplest and cheapest method of organizing your business. Some of the features for a Sole Proprietorship as following:
Owned by one individual
Could be any size of business
Sole Proprietorship is NOT a legal entity
The owner is completely responsible for its debt and tax liability
Can operate under the owner’s name or trade name
PARTNERSHIP: A Partnership is an agreement that usually set up to define the relationship between the partners. Some of the features for a Partnership as following:
Agreement between two or more individuals or corporations
Several types of partnership such as general, limited, limited liability
Partnership is NOT a legal entity
Each partner shared all income as well as all debt and liability
Partners are directly liable for any debts, losses or any tax and financial liabilities
Partners can be liable for any actions committed by another partner
CORPORATION: A Corporation, unlike Sole Proprietorship and Partnership, is a legal entity which is separate from its owners. Some of the features for a Corporation as following:
Easy to raise capital
More expensive and regulated structure
Can be incorporated at the federal or provincial/territorial level
Corporation is a separate legal entity
As a shareholder, you may not be personally liable for the debts
You may be required to prove residency or citizenship of directors
Structuring your business is most important items because, the type of structure you choose will affect the way you report your income, how much you pay in taxes and most importantly personal liability for business debts.
CONTACT US: If you have any questions or inquiries regarding structuring your business, please contact us at 647-861-2099 or send email to email@example.com to book a free consultation.