What will the legal form of your business be?
How-to
Friday, November 13, 2015
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Inc., Ltd., S.E.N.C. Each one of these abbreviations refers to a legal form of business. What legal form should your company adopt? To help you answer this question, we invite you to discover the main features of the following legal forms: the sole proprietorship, the partnership (general partnership or limited partnership), the corporation and the cooperative.
Unincorporated sole proprietorship
- You as an individual are the sole proprietor of the company and no distinction is made between your personal assets and your business assets. You get all the benefits of the business but also assume all the risks.
- If the business is run under a name that does not include your first and last names, you must register the business name with the Registraire des entreprises.
Partnership
General partnership
Similar to a sole proprietorship except that revenues are shared with one or more partners.
Business must be registered with the Registraire des entreprises. Declaration of registration form must be resubmitted when a partner leaves or a new partner arrives.
Limited partnership
Company that includes 2 types of partners:
- -General partners, who have the same rights and responsibilities as partners in a general partnership.
- -Limited partners, who have no decision-making power and whose liability is limited to the amount of funds or goods invested in the company.
Corporation
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- Most common type of business structure, even though legal requirements are more complex.
- Corporations are considered legal persons and separate entities from its owners, the stockholders.
- Legal entity made up of persons or companies seeking to satisfy the same economic, social or cultural need, or who come together to run a business according to cooperative principles.
- Formed in accordance with a provincial cooperative statute (in Quebec the Loi sur les coopératives au Québec) or the Canada Cooperatives Act if the cooperative operates in 2 or more province.
WANT TO LEARN MORE?
Read the full article on Desjardins' website
