There are four types of business ownership possible in Canada: as an entrepreneur or small business owner, you can choose to set up a sole proprietorship, a partnership, a corporation or a cooperative. Choosing the ownership type most appropriate for your business will determine how it is organized, how revenue and expenses are handled, and how you file your corporate income tax. At Lift Legal, we recommend weighing the pros and cons of each model before deciding on the legal structure of your new business venture.
A cooperative is a legally incorporated owned and controlled by its members—people seeking to satisfy common needs (e.g., employment, access to products or services, sale of their products or services). Although cooperatives serve a wide variety of functions, they generally fall within one of four categories:
Regardless of the category to which they belong, all cooperatives share three common characteristics: ownership, governance and distribution of profits.
In a cooperative, individual members’ liability is limited to the extent of the value of shares they hold. Cooperatives may enter into contracts under their operating name, but they may only be legally structured as cooperatives if they are organized as, and will be operated in accordance with, the Canada Cooperatives Act.
Visit Industry Canada’s to learn more about how cooperatives operate and the ways they differ from other businesses.
Whether you choose to set up a sole proprietorship, a partnership, a corporation or a cooperative, the legal form of business ownership you choose is an important decision. Your business’s legal structure will affect not only your setup, administrative and operational costs, but also your tax planning and possibly also your succession planning. It is something to decide even before deciding on a business name.
This is not to say that your business’s legal structure can’t change as your circumstances change. Choose the form of ownership appropriate to your present situation, and review it as your business grows. Trust the Lift Legal team to meet with you to provide the guidance and answers you need.
Contact us today to arrange your consultation.
Disclaimer:
The information on this blog and website is provided by Lift Legal for educational purposes only. It is intended to give readers a general understanding of the law, not to provide specific legal advice. Information contained in these pages should not be used in place of competent legal advice from a licensed, practising lawyer in Alberta. Furthermore, by using this blog and website, you understand that no lawyer-client relationship exists between you and Lift Legal.
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