Skip Header Navigation

Sign-in

  
» Business Solutions
Resource Center
  Business Tips
  Starting a Business
  Getting Ready
  Assemble Your Support Team
  Create the Plan
  Working With RBC
  Managing Your Money
  Growing Your Business
  Resources
  Growing your Business
  Expanding a Business
  Business Succession
  Publications
  Women Entrepreneurs
  Industry Expertise
» Business Accounts
» Borrowing & Credit
» Cash Management
» Investments
» Merchant Services
» Payroll Services
» Online Banking
» Branch & ATM Locator
» Commercial Financial Services
» Contact Us
» Search
Starting a Business

Create the Plan

 

Choosing the Right Structure

Choosing the right legal structure for your situation can be an advantage:



  • Saves money at tax time
  • Makes it easier to (and cheaper) to pay yourself
  • Avoids potential personal legal liability
  • Brings revenue earned on foreign sales back to Canada
  • Allows you to sell your business or pass it on to heirs.

The three basic legal structures

Sole proprietorships

  • You alone own it and are 100% responsible for its debts and liabilities. All earnings are taxed as your personal income. This is the most popular small business structure because it’s simple and straightforward.

Partnerships

  • Two or more owners agree to share profits and losses according to their share in the firm. In a general partnership, all partners are liable for debts; in a limited partnership, one or more partners limit their liability by not actively managing the business.

Corporations

  • The company earns revenue, incurs losses and pays taxes separately from its owners. Companies often pay tax at a lower rate than individuals. Owners’ liability is limited to what they invest in the company, and they have options as to when and how they take money out of the company.

Sole proprietorship or partnership: Is it right for you?

Yes

No

You will be the sole owner or own the business with just a few partners or family members.
You plan to start the business using only personal savings or investments from friends and family.
You expect business revenues to support only you and your partners or family members.
You plan to do most of the work yourself.
You will borrow personally on behalf of the business.
You are in a low personal income tax bracket.
Your business is highly unlikely to face a lawsuit or get into debt.
You have limited net worth (personal assets).

If you answered yes to most of these questions, you should operate your business as a sole proprietorship or partnership.


Corporation: Is it right for you?

Yes

No

Ownership will be divided among several shareholders.
You expect significant start-up costs.
You will be hiring employees and paying out wages and salaries.
You will require additional financing beyond savings and investments from family and friends.
You expect increasing revenues and a rising asset base.
You will probably need to raise equity or issue debt, either now or later.
You will put a full management and organizational structure in place.
You expect to look into income-splitting and tax-deferral options.
You want to protect your existing substantial net worth.

If you answered yes to most of these questions, you should operate your business as a corporation.


Banking That's Right for You


Our small business advisors are experienced in helping businesses at every stage of development. Come in and talk with us.

Call now Call now -
1 800 769-2520
Visit your Local Branch Visit your
Local Branch
Apply Online for Loans & Credit Apply Online

Jump To
Business Plans
Choosing the Right Structure
Registering Your Business
Paying Yourself
Financing Basics
How Much Will You Need?

Take Action
  Call 1-800-769-2520
  Visit Your Local Branch
  Send Us an Email
  Apply Online

Tools
  Account Selector
  Loan Calculator

 
11/16/2011 13:04:46