In Nova Scotia, there are two types of corporations:
a business
a not-for-profit
Business Corporations
A corporation is its own legal entity (i.e. a pretend person), unlike a sole proprietorship or a partnership. The corporation owns the assets and has the liabilities, not the shareholders (or the directors). A corporation may own property in its own name, and it may sue and be sued in its own name. It is the corporation who owns the business, not the shareholders (or the directors). To set up a corporation, you have to file articles of incorporation with the government. You also have to set up a separate bank account for the corporation, and the corporation files its own tax return. The corporation is the employer (not you).
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You can incorporate a corporation to operate your business, and you can be the only director, officer and shareholder. If two or more people set up a corporation they are not partners in the legal sense; they are likely the directors and shareholders of the corporation. Because the corporation is a separate legal entity, you can be an employee of the corporation.
Further, the corporation is taxed on its own, and you pay tax on what the corporation pays you (either by way of salary or dividends).
The big advantage of a corporation is limited liability. Unless you have given a personal guarantee to guarantee the debts and obligations of the corporation, and as long as you enter into contracts properly (i.e. in the name of the corporation and not your own name), you should have protection from personal liability.
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Non Profit Corporations
Not-for-profit corporations are organizations that provide products or services to improve or benefit a community. These organizations are usually concerned with generating enough revenue to provide support to their chosen community. Any money made by a not-for-profit is not for the personal gain of its directors, members or officers, but goes back into the organization to further its aims and projects. For example, a social club may hold an art sale or craft fair in order to generate revenue for the services it provides to the community.
There are several kinds of not-for-profit organizations such as:
Professional or community organizations
Sport or athletic
Social clubs
Service clubs (for example Kiwanis or Lions)
Charities
