31
Jan
2023

What Are the Different Types of Business Structures Available in Canada

January 31st, 2023
What Are the Different Types of Business Structures Available in Canada

When starting a business in Canada, one of the most important decisions you'll make is choosing the business structure. The type of structure you choose will determine your legal and financial obligations and your level of personal liability. The three most common business structures available in Canada are sole proprietorship, partnership, and corporation.

Sole Proprietorship

A sole proprietorship is the simplest and most common type of business structure in Canada. It's owned and operated by one person and has no legal distinction between the business and the owner. 

With a sole proprietorship, the owner is personally liable for all debts and obligations of the business. However, it also means that the owner has complete control over the business and keeps all the profits.

Partnership

A partnership is a business structure that involves two or more people working together to run the business. Each partner is personally liable for the debts and obligations of the business, and profits are shared among the partners. 

Partnerships can be general or limited. In a general partnership, all partners have equal control over the business, whereas, in a limited partnership, one or more partners have limited control and are only liable for the debts of the business to the extent of their investment.

Corporation

A corporation is a separate legal entity from its owners, meaning the business can enter into contracts and legal disputes, and own property in its name. The owners of a corporation are shareholders, and they are not personally liable for the debts and obligations of the business. 

Corporations are the most complex business structure, but they provide the most legal protection for owners.

Need Help Choosing a Business Structure?

When choosing a business structure, consider your personal goals, the size and nature of your business, and the level of risk you're willing to assume. Each business structure has advantages and disadvantages, so research your options before deciding.

If you're starting a business in Canada and need assistance with accounting, taxes, or business structure, contact HWGCA for professional guidance and support. We have the expertise and experience to help you navigate the complex legal and financial landscape of starting a business in Canada.

Located in Surrey (Cloverdale), British Columbia, since 1971, HWG, Chartered Professional Accountants proudly helps clients throughout the Lower Mainland and across Canada.

Our team of chartered professional accountants provides helpful business and personal tax services. Our continued growth proves the success of our client relationships.