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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.


  • 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.


  • 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?



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?



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.

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Business Plans
Choosing the Right Structure
Registering Your Business
Paying Yourself
Financing Basics
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11/16/2011 13:04:46