This article tells you about Different Types Of Business Structures In Canada. There are many factors influencing the structure of a business in Canada. This includes legal considerations, the area where the business is located, and also taxation. Business structure in Canada is basically categorized in to three prominent groups. The first among this is sole proprietorship. Sole proprietorship is the simplest of all the Canada business organizations to start, as well as, to operate.
This type of non incorporated business will be owned entirely by a single individual. The owner of the business organization is directly responsible for risks and other liabilities associated with the firm. Whether the company assets are used for personal purpose or business purpose, the owner has to undertake the risk involved for all these assets owned by him.
The next structure is known as partnership and it is a coalition between two people who run a common business initiative – it’s typically pretty easy as it’s all small business finance. Capital is divided between partners and risks involved in the business are also shared amongst partners in the business. Partnership business in Canada is possible even without a written agreement. To start any Canadian business you will need to have some knowledge of it which will enable you understand the higher and complicated topics of the work at hand.
Corporation is another type of business structure existing in Canada and it is also the most popular form business. A corporation can own properties in its own name and they can even enter into contract as it is a separate legal body. The payment of tax for the income acquired by such corporations is mandatory as it has a separate legal existence unlike other business structures. Such a company has to file its own income tax returns under rule of Canadian government.
The main jurisdictions responsible for creating a corporation are provincial law as well as federal law. Under provincial law the company is incorporated provincially if it is operating only in one province and if it doing business across Canada, it should be incorporated under federal law. Several businesses like banks fall under this category.
Apart from these 3 basic business structures, Canada also has a few variations of these basic business categories. These are joint ventures, branch office and finally a subsidiary. A joint venture entails an agreement for contribution by the people involved in a venture. The agreement is mainly aimed at providing raw materials, and capital to a single business enterprise. There is no specific law coined in Canada to control such joint ventures.
They are governed by the agreement between the two parties. The terms of collaboration must be outlined in the case of a joint venture contract. Individual contributions along with management structure and sharing of profits are clearly shown in these legal contracts.
A foreign enterprise can open a branch office to make use of tax benefits involved in this form of business. There are several things to be done before a company can open a branch office somewhere in Canada. The main thing is to get a license or register in the provincial area in Canada to carry out business operations. Another option is by starting a subsidiary of a big foreign corporation in Canada under defined laws.