Choosing a Business Structure

One of the first things you will need to do is decide on the business structure that best suits your needs. Pawlina Law can help you choose the correct form of business (sole proprietorship, partnership, corporation) based on the number of people involved, the type of business, tax issues or liability concerns, and financial requirements. We can also help you draw up the necessary legal documents that set out the terms of any partnership or other shared ownership. These legal documents will provide your business with the necessary certainty to allow you to grow and prosper. This will also help ensure that all parties will be treated fairly, and that there is a mechanism for handling any disputes or disagreements. The government of Canada has provided some useful information here on choosing a business structure, 

Sole Proprietorship

Whenever someone beings operating a business, they become a sole proprietor. Depending on how you operate, what you do, and what name you operate under, you may need to register your sole proprietorship. Moreover, depending on how much revenue you generate in given year, you may also need to register for HST. Pawlina Law can advise you on what you need to do to comply with business regulations in Ontario.

Partnership

A partnership exists if there is a relation that subsists between persons carrying on a business in common with a view to profit. There are three types of partnerships in Ontario, a general partnership, a limited liability partnership and a limited partnership. If there is a partnership, the provisions of the Partnerships Act (Ontario) would govern the relationship between the business partners. Some provisions of the Partnerships Act (Ontario) can be varied by a partnership agreement, which is a contract between partners that lists the rights and responsibilities of the partners. Although typically written, a partnership can be an oral agreement. Again, on how you operate, what you do, and what name you operate under, you may need to register your partnership.

Corporation

Incorporation is the creation of a Corporation. Corporations aggregate are by far the most common and important form of business organization in modern Canadian society. They range in size from small corporations, with a single shareholder, no employees and nominal capital, to huge multinational enterprises with hundreds of thousands of shareholders and employees, and issued capital in the billions of dollars.

There are a lot of different types of corporations, including of a For-Profit, Not-For-Profit, Co-operative and Professional Corporations. Incorporation can be done at the federal or provincial/territorial level using the Ontario Business Corporations Act (the “OBCA“) which is administered by the Ministry of Government and Consumer Services and the Canada Business Corporations Act (the “CBCA“) which is administered by Corporations Canada. More information on choosing a jurisdiction can be found here.

When you incorporate your business, it is considered to be a legal entity that is separate from its shareholders. Moreover, the share structure of a corporation could also have tax implications. As a shareholder of a corporation, you will not be personally liable for the debts, obligations or acts of the corporation. It is always wise to seek legal advice before incorporating. Pawlina Law can advise you on whether to pursue incorporation, how to structure your share provisions and all other aspects of incorporation. Unlike other incorporation services, we focus on Corporate Law.