The form of business ownership describes how a business is legally set up. In other words, the form of business ownership is the business' legal structure.
In Canada, the most common forms of business ownership are the sole proprietorship, partnership, and corporation.
There are other forms of business ownership available in Canada as well, such as the limited partnership, cooperatives, and societies, but the three listed above are the main choices for anyone starting a business.
Don't confuse the form of business ownership with the type of business, such as retail, service, etc. Most types of business can have any form of business ownership.
The form of business ownership you choose is one of the most important decisions that you'll make when you're starting a business. Each form of business ownership has its own liabilities and responsibilities.
For instance, while a corporation is more expensive to form and maintain, it provides the business owner with more personal liability protection than the sole proprietorship or common partnership form of business ownership. (See A Comparison of the Forms of Business Ownership in Canada.)
The process of creating and registering each form of business ownership differs as well, although the general process of registering each form of business ownership is similar from province to province. The Business Registration section of this website provides information on registering forms of business ownership across Canada.
The form of business ownership you choose will affect many aspects of your business' operation, from attracting potential clients through filing taxes, so it's important to choose wisely. You may want to seek professional advice to help you decide.
