Business Structure

Sole Proprietorship

In a sole proprietorship, the owner is 100% liable (legally responsible) for the business, including all debts and actions. The business income tax is filed with the owner’s personal income.

Some examples of common sole proprietorships are housecleaning services, real estate agents, landlords, general contractors, agriculture (those who own farms, ranches, nurseries and orchards), etc.

Pros

  • Low start-up costs
  • Greatest freedom from regulations
  • Owner has full control

Cons

  • Unlimited liability (you can be sued)
  • Lack of continuity
  • Difficult to raise capital
  • Limited transfer of ownership

Partnership

In a partnership, each partner is wholly liable for the business. Debts and profits are shared among the partners. It is strongly recommended that a Partnership Agreement be drawn-up by a lawyer.

Some examples of common partnerships are accounting firms, law firms, doctors’ offices, etc.

Pros

  • Low start-up costs
  • Broader management base
  • Possible tax advantages
  • Limited outside regulations

Cons

  • Unlimited liability
  • Lack of continuity
  • Divided authority
  • Limited transfer of ownership
  • Difficult to find suitable partners

Corporation

A corporation is a distinct legal entity where owners have legal liability up to the limit of their investment. Debts and profits are shared among shareholders. Incorporating can be complicated so legal and accounting assistance is recommended.

Pros

  • Limited liability
  • Ownership is transferable
  • Possible tax advantages
  • Continuous existence
  • Easier to raise capital

Cons

  • Closely regulated
  • Costly to set-up
  • Charter restrictions
  • Record keeping requirements
  • Complex tax rules

Help Me Choose

  • I plan to own and operate this business myself
    • Sole proprietorship
    • Corporation
  • This will be a small business without a lot of risk
    • Sole proprietorship
    • Partnership
  • I plan to share ownership and management responsibilities with others
    • Partnership
    • Corporation
  • This will be a business that has employees and equipment so I would like to limit risk.
    • Corporation
  • I would like to seek investment from other people
    • Corporation

Workshops + EventsView All

Apr 22

Presentation and moderated discussion on consumer demand for South Eastern Ontario vacation experiences and likely market profile based on Twenty31’s latest consumer research st

Apr 22

Starting a small business? Learn how Kingston Economic Development can help!

Apr 27

Learn how to create, produce, and market a podcast for your brand.

Apr 27

Networking: Join us for a free, fun, and informal networking event!!

Apr 29

Starting a small business? Learn how Kingston Economic Development can help!

Apr 29

Join us April 29th as Startup Grind presents An Intimate Look at Female Entrepreneurship in Patriarchal Industries.