Starting or Incorporating a Business

A sole proprietorship is subject to very few formalities in order to be valid. One person owns and operates the business and is required to register the enterprise with the registraire des entreprises du Québec (Quebec Enterprise Registrar) in accordance with legal publicity regulations. We can assist you in choosing a corporate name that complies with legal publicity requirements.

A sole proprietorship is not endowed with juridical personality and its patrimony is not separate from that of its owner. In short, lawsuits resulting from the acts of the business may be filed against the owner personally.

Most often, self-employed or independent workers choose to do business as a sole proprietorship.

A general partnership, just like sole proprietorships, is not endowed with juridical personality and does not have a separate patrimony. It must also be registered with the Quebec Enterprise Registrar.

However, a general partnership implies that two or more people are in business together. The partners must enter into a Partnership Agreement in order to create the partnership and govern the rights and obligations of the partners.

Each partner shall make a capital contribution when the partnership is created or when a new partner is integrated.

Notaries are fully qualified to draft a Partnership Agreement, which shall not only set out how partners are liable for debts, how profits are to be split but also how a partner is withdrawn from the partnership, either by sale or in accordance with a shotgun or piggyback clause.

A company is endowed with juridical personality and has a patrimony that is separate from that of its founder. This means that – just like any person – when you choose to incorporate a business, lawsuits may be filed against it. Such lawsuits are filed directly against the company; the owner’s personal patrimony, being separate from that of the company, remains unaffected.

A business corporation may be of provincial or federal jurisdiction in Canada. Work with your notary to decide which option better suits your needs.

Incorporating a business allows a corporation to issue shares to its shareholders, who are the real owners of the business. Shareholders will then, on a prorated basis according to their ownership interest, appoint the directors of the corporation. The directors manage the business corporation and, as such, are therefore liable for all decisions.

Incorporating a business has several advantages. However, this process is more expensive than a sole proprietorship and, generally, a general partnership. Both the start-up costs and annual fees are higher because a business corporation must file its own income tax return as well as hold annual general meetings every year.

A company is endowed with juridical personality and has a patrimony that is separate from that of its founder. This means that – just like any person – when you choose to incorporate a business, lawsuits may be filed against it. Such lawsuits are filed directly against the company; the owner’s personal patrimony, being separate from that of the company, remains unaffected.

A business corporation may be of provincial or federal jurisdiction in Canada. Work with your notary to decide which option better suits your needs.

Incorporating a business allows a corporation to issue shares to its shareholders, who are the real owners of the business. Shareholders will then, on a prorated basis according to their ownership interest, appoint the directors of the corporation. The directors manage the business corporation and, as such, are therefore liable for all decisions.

Incorporating a business has several advantages. However, this process is more expensive than a sole proprietorship and, generally, a general partnership. Both the start-up costs and annual fees are higher because a business corporation must file its own income tax return as well as hold annual general meetings every year.

Whether you choose to create a sole proprietorship, general partnership or to incorporate a business corporation, certain responsibilities are recurrent. In fact, irrespective of the vehicle chosen to start a business, an entrepreneur must register the business and file the requisite declarations with the government. If the entrepreneur expects to make more than thirty thousand dollars ($30,000.00) in sales per year, he or she will have to register for tax purposes (GST-QST).