Types of business structures in Canada: Corporations

Another type of business structure is a corporation. Incorporation can be done at the federal or provincial/territorial level. When you incorporate your business, it is considered to be a legal entity that is separate from its shareholders. As a shareholder of a corporation, you will not be personally liable for the debts, obligations or acts of the corporation. It is always wise to seek legal advice before incorporating.

Advantages:

• Limited liability
• Ownership is transferable
• Continuous existence
• Separate legal entity
• Easier to raise capital than it might be with other business structures
• Possible tax advantage as taxes may be lower for an incorporated business

Disadvantages:

• A corporation is closely regulated
• More expensive to set up a corporation than other business forms
• Extensive corporate records required, including documentation filed annually with the government
• Possible conflict between shareholders and directors
• You may be required to prove residency or citizenship of directors

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