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.
If you prefer not to be a sole owner and proprietor of your business, you may wish to consider legally setting up as a partnership with any number of other individuals. The law does not set a limit on the number of partners that can be involved.
In Alberta, there are three types of partnerships: general partnerships, limited partnerships and limited liability partnerships.
A limited partnership may not be registered as a limited liability partnership.
Advantages
In a limited liability partnership, partners have more liability protection than do general partners. If a client feels wronged or injured as the result of the action of one partner and chooses to sue, he or she can sue the partnership. However, only the assets of the partner who worked with that client will be at risk. This would not be the case if all were general partners: in that instance, all partners’ assets would be at risk.
Disadvantages
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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