Types Of Businesses In Canada


Starting your journey to self-employment is a very exciting thing! There are many steps to ensuring that you’re setting yourself up for success. One of the first steps in starting any business is determining your business structure. 

Generally, there are three main business types in Canada:

  • Sole Proprietorship
  • Partnership
  • Corporation

Here’s some information from the Government of Canada on each structure: 


A sole proprietorship is an unincorporated business that is owned by one individual. It is the simplest kind of business structure.

The owner of a sole proprietorship has sole responsibility for making decisions, receives all the profits, claims all losses, and does not have separate legal status from the business. If you are a sole proprietor, you also assume all the risks of the business. The risks extend even to your personal property and assets.

If you are a sole proprietor, you pay personal income tax on the net income generated by your business.

You may choose to register a business name or operate under your own name or both.


A partnership is an association or relationship between two or more individuals, corporations, trusts, or partnerships that join together to carry on a trade or business.

Each partner contributes money, labour, property, or skills to the partnership. In return, each partner is entitled to a share of the profits or losses of the business. The business profits (or losses) are usually divided among the partners based on the partnership agreement.

Like a sole proprietorship, a partnership is easy to form. In fact, a simple verbal agreement is enough to form a partnership. However, most partnerships are governed by a written agreement setting out rules for partners entering or leaving the partnership, the division of partnership income, and other matters.

The partnership is bound by the actions of any member of the partnership, as long as these are within the usual scope of the operations.


A corporation is a separate legal entity. It can enter into contracts and own property in its own name, separately and distinctly from its owners.

It may have some of the following features:

  • it is a separate legal entity with a lasting existence
  • it can generally raise large amounts of capital (money or other assets) more easily than a sole proprietorship or partnership
  • the shareholders cannot claim any loss the corporation incurs

When forming a corporation, the owners transfer money, property, or services to the corporation in exchange for shares. The owners of these shares are shareholders.

You can buy and sell shares of a corporation without affecting the corporation’s existence. A corporation continues to exist unless it winds up, amalgamates, or gives up its charter for reasons such as bankruptcy.

You set up a corporation by completing articles of incorporation and sending the documents to the appropriate provincial, territorial, or federal governments.

To learn much more about Starting a Business in Canada, visit www.canada.ca .

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