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Sole Proprietorship A sole proprietorship is an individual-operated business and is generally the simplest way to establish a business. The sole proprietor has unlimited liability, meaning they are fully responsible for all debts and obligations of the business. Creditors can claim against all the sole proprietor’s assets, both business and personal. If the business operates under a name other than the proprietor’s own, the business name must be registered with the Ministry of Government Services (MGS) under the Business Names Act, with the required fee paid. If the business operates under the proprietor’s own name without additional words, registration is not necessary. The business name registration is valid for five years and must be renewed thereafter. Partnership A partnership is an agreement where two or more individuals combine resources to operate a business for profit. It is advisable to draw up a partnership/shareholders agreement with the assistance of a lawyer to establish business terms and protect the partners/shareholders in case of disagreements or business dissolution. Partners share profits according to the terms of the agreement. General Partnership In a general partnership, all partners share business management and are personally liable for all business debts and obligations. Each partner must assume responsibility for the actions of the other partners. The names and addresses of all partners must be registered with MGS, and the registration fee paid. The partnership registration must be renewed every five years. Corporation A corporation is a legal entity created by law that can have an indefinite lifespan, separate from its shareholders or members. It can own property, acquire rights and obligations, enter contracts, and sue or be sued like a natural person. A business corporation is formed to operate for profit. The primary advantage of incorporation is limited liability. Additionally, corporations are more attractive to investors and financial institutions, can set up pension plans and profit-sharing stock options, and continue operations regardless of the death of a shareholder or principal. A not-for-profit corporation is created for charitable, religious, professional, sporting, or patriotic purposes without pecuniary gain. Types of not-for-profit corporations include:
Business or Style Name for a Corporation When a corporation operates under a name other than its legal corporate name, it must register the trade or business name under the Business Names Act. The business or trade name cannot include legal endings (Limited, Limitée, Corporation, Incorporated, Incorporée, or their abbreviations). The registration must be renewed every five years. This type of business name registration may also be referred to as a trade name, style name, “carrying on business as…,” or a division of another entity. Trademark A trademark is a word, picture, symbol, or any combination used to identify the goods and/or services of a person or company. In Canada, a trademark is registered for 15 years from the date of registration and can be renewed indefinitely every 15 years. While registration is not mandatory, it is strongly recommended as it serves as prima facie evidence of ownership and is easier to protect than an unregistered mark. A Canadian-registered trademark grants exclusive rights within Canada. For international protection, it is advisable to register the trademark in each country where you sell products or services.
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