One of the most fundamental decisions confronting founders is how they will structure their business.
Starting with the most basic option, a sole proprietorship limits ownership of the business to a single person with direct control over all decision-making and management. This means they are entitled to all profits, but on the flip side, it also exposes that person to the full extent of any liabilities associated with the business.
Incorporation is another option for owners of more complex businesses who wish to benefit from some level of protection offered by a corporate veil. This process puts some distance between the business and the people at its helm by creating a corporation — a legal entity entirely separate from any of its shareholders.
In between these two extremes, a partnership company governed by B.C.’s Partnership Act allows business owners to formalize their shared ownership and responsibility, without creating a separate legal entity.
With the help of an experienced lawyer and an accountant, you can figure out which option makes the most sense for your enterprise. The appropriate choice will depend on various factors, including the specific industry your business operates in, the level of income you expect it to generate, tax consequences and potential liability associated with the business.