Types of Businesses

In starting a new business, one of the first decisions you must make is what type of business you wish to set up. There are many options available, including incorporation, partnership and sole proprietorship. Please note that the laws governing such matters depend on the jurisdiction -- whether it is federal or provincial, and which province.

The most common forms of business organization are:

Sole Proprietorship:   This is basically a non-incorporated business with a sole owner.

Corporation: A corporation is a separate legal entity in law from its owners. It can sue and be sued in its own name. Each jurisdiction in Canada (the ten provinces, the territories and Canada) has its own rules for incorporation.

Partnership: The Ontario Partnership Act defines a partnership as the relationship between persons who are carrying on business in common with a view to profit. It is NOT a legally separate entity from its partners. A partnership can be either General or Limited.

Co-Ownership: According to the Ontario Partnership Act, this is a situation where two or more persons own property jointly. This does not result in a partnership, even if the co-owners share in the profits generated by the property.

Non-profits, Co-ops and Others: These are specialized, and outside the scope of our normal services.

You must review your options carefully, as the consequences of a wrong decision can be quite dire. For an excellent overview of the subject, and a review of the advantages and disadvantages of each type of business, click here to go to the Government of Ontario website.

Similarly, there is an excellent publication on incorporation at the Federal Goverment website. Although oriented towards a federal incorporation, most of the same principles apply in Ontario and other provinces as well.