Business Registration

Do you want to start a business and don’t know how or where to start? Below are the descriptions of the different business organization types. Once you decide on the model of your business contact us for assistance with the registration and setting up of pertinent accounts with the CRA.

Sole Proprietorship

“A business that legally has no separate existence from its owner. Income and losses are taxed on the individual’s personal income tax return”. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts. A sole proprietorship can operate under the name of its owner or it can do business under a registered name, however it does not create a legal entity separate from the sole proprietor owner. The owner assumes all the liabilities of the business.

Partnership

An association of two or more persons engaged in a business enterprise in which the profits and losses are shared proportionally. The legal definition of a partnership is generally stated as “an association of two or more persons to carry on as co-owners a business for profit.” The partnership is not a distinct entity from its partners. Therefore each partner must file an individual partnership information return with CRA.

Corporation

“A corporation is defined as a legal entity or structure created under the authority of the laws of a state, consisting of a person or group of persons who become shareholders. The entity’s existence is considered separate and distinct from that of its members”.

Like a real person, a corporation can enter into contracts, sue and be sued, pay taxes separately from its owners, and do the other things necessary to conduct business. Since a corporation is an entity in its own right, it is liable for its own debts and obligations. As a result, providing that corporate formalities are followed, the corporation’s owners (the shareholders) enjoy limited liability, and are legally shielded from the corporation’s liabilities and debts. Corporations have to file a T2 corporate tax return at year end.

Charity

“A registered charity is an organization established and operated for charitable purposes, and must devote its resources to charitable activities. The charity must be resident in Canada, and cannot use its income to benefit its members”. A charity also has to meet a public benefit test. Charities must file a T3010 Charitable information return at year end.