Choosing how to structure a business is one of the first legal decisions an owner makes. It affects liability, taxes, record-keeping and how the business can grow.
Sole proprietorship, partnership or corporation?
A sole proprietor and the business are the same legal person, which means personal assets may be exposed to business debts. A partnership involves shared responsibility among the partners. A corporation is a separate legal entity, which can offer important protections but also brings ongoing obligations. Your accountant and your lawyer can help you weigh these points together.
Alberta or federal?
A corporation can be incorporated under Alberta’s Business Corporations Act or under the federal Canada Business Corporations Act. Either may carry on business in other provinces, but a corporation will generally need to register in each province where it operates outside the one in which it was incorporated. The right choice depends on where you plan to operate, the name you want and your plans for growth.
After incorporation
Incorporating is the start, not the finish. Owners should consider:
- a shareholder agreement, particularly where there is more than one owner;
- organizing the corporation and keeping its minute book and records up to date;
- filing annual returns and other required filings on time; and
- written agreements with customers, suppliers and employees.
Next steps
If you are starting or restructuring a business, contact us to discuss your plans. See our business and corporate services for more.
This article is general information, current at the date of publication, and is not legal advice. Please speak with a lawyer about your own situation. Reading this article does not create a lawyer-client relationship.