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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

  • Simple structure

  • 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

  • Simple taxation

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

  • Simple structure

  • 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

  • Ownership transferable

  • 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 to book a free consultation.

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