Sole Proprietorship |
Partnership |
Corporation |
Non-profit Corporation |
|
Ownership Issue |
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| Legal Status | Business has same legal personality with owner. | Business has some | Business has a completely distinct legal personality from its owners. | Organization has a completely distinct legal personality from its members. |
| Limited Liability Protection | No | No | Yes | Yes |
| May issue shares to attract investors | No | No | Yes | Not applicable |
| Ease of raising capital | Most difficult | Very difficult | Easiest and most flexible | Not applicable |
| Decision-Making and Management | Single owner has total control. | Generally majority ownership rules, subject to partnership agreement limitations, and type of partnership. | Generally majority ownership rules, subject to shareholder agreements and exceptional situations provided in law. | Generally majority membership rules, subject to by-laws exceptional situations provided in law. |
| Business Name protection | No. Requires trademark registration protection. | No. Requires trademark registration protection. | Yes. However, trademark registration protection gives greatest protection. | Depends |
Getting Started |
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| Ease of Formation | Yes | Yes | No | No |
| Initial filing with Corporate Registry (+ filing fee) required for creation |
Simplest and least expensive. Can cost between $60 and $200 (including government filing fee) |
Relatively simple and inexpensive. Can cost between $60 and $200 (including government filing fee) |
Expensive. Can cost between $400 to $800 (including government filing fees) |
Expensive. Can cost between $500 to $800 (including government filing fees) |
| Legal and administration costs | Add income/loss to personal tax returns. | Add income/loss to personal tax returns. | Need to file separate tax returns for corporation and prepare financial statements. | Need to file separate tax returns for corporation and prepare financial statements. |
| Continuity of Life | Ends with life of owner | May continue after the death of 1 of the owners. | Indefinite lifespan as a corporation has a district legal personality from its owners. | Indefinite lifespan as a corporation has a district legal personality from its owners. |
| Number of Owners | 1 | 2 or more | Minimum 1 | Not applicable. Non-profits have members and not owners. Minimum is usually 3. |
| Eligible Owners | 1 | 2 or more | Maximum 50 | Unlimited. |
| Ease of transferability of ownership | Can only be a sale or transfer of assets | Some flexibility. | Most flexibility. | Little flexibility. |
| Distribution of voting power | Not applicable as the single owner makes all decisions. | Can be agreed in a partnership agreement. | Most flexibility. Can create different classes of shares and |
Not applicable |
Taxation |
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| Tax Year | Calendar year | Calendar year | Can select any year-end tax year | Can select any year-end tax year |
| Owners can report business profit and loss on their personal tax returns | Yes. | Yes. | No. | Not applicable |
| Ability to carry-forward losses from one financial year to a subsequent financial year | No | No | Yes | Not applicable |
| Register for Sole Proprietorship |
Register for a Partnership |
Register a Corporation |
Register a Non-Profit Corporation |
|
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