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Choosing the Right Business Structure for Your Canadian Company
A business structure is an important decision when starting up a new company. It affects everything from taxes to legal obligations. Find out what type of business structure is best for you!
Choosing the right business structure for your company is an important decision that will affect how much money you earn and how much tax you pay. This guide explains the different types of business structures available in Canada, and which one might be best for you.
There are three main types of entities that businesses can choose from: Sole Proprietorship, Partnership, and Corporation. Each has its own advantages and disadvantages.
If you operate as a sole proprietor, you are personally liable for any debts incurred by your business. However, there are no formal requirements for filing taxes.
Partnerships are similar to corporations, except partnerships do not need to file annual returns with the government. Instead, partners must file personal income tax returns every year.
Corporations are separate legal entities from their owners. They are taxed separately from their owners, and they are required to file annual returns with Revenue Canada.
Should you incorporate?
Incorporating a corporation lets you pay a lower tax rate than individuals. Sole proprietorships and partnerships pay a higher income tax rate than incorporated businesses.
-Simpler capital access
-Reduce tax rate
-With limited liability
-Independent legal entity
-Certificate of incorporation
-Notice of articles
-CRA Business Number
-Import Export Account