1. Sole Proprietorship

A sole proprietorship is the simplest form of business entity, where a single individual owns and operates the business. The owner is personally liable for all debts and obligations of the business, meaning personal assets are at risk.

2. Partnership

A partnership involves (usually) two or more individuals who share ownership and operation of a business. There are two main types of partnerships:

• General Partnership: All partners share responsibility for managing the business and are personally liable for debts.

• Limited Partnership: Consists of general partners (who manage the business) and limited partners (who contribute capital but have limited liability and no management authority).

3. Corporation

A corporation is a legal entity separate from its owners (shareholders). It can enter contracts, sue or be sued, and its liability is limited to the investment made by shareholders. Corporations can be further classified into:

• Public Corporation: Shares are publicly traded on a stock exchange, and ownership is distributed among the public.

• Private Corporation: Shares are held by a small group of individuals and are not publicly traded.

4. Cooperative

A cooperative is a member-owned business entity that operates for the mutual benefit of its members. Members typically share in the profits and have a say in the management of the cooperative. Common types include consumer cooperatives, worker cooperatives, and agricultural cooperatives.

5. Non-Profit Organization

A non-profit organization operates for purposes other than making a profit, such as charitable, educational, or social causes. These entities do not distribute profits to members or directors and often enjoy tax-exempt status. They can be incorporated or unincorporated. A Non-Profit Organization may be an Association or a Foundation.

6. Trust

A trust is a legal arrangement where one party (the trustee) holds assets for the benefit of another party (the beneficiary). Trusts can be used for various purposes, including estate planning and asset protection.

7. Joint Venture

A joint venture is a temporary partnership between two or more parties to undertake a specific project or business activity. Each party shares profits, losses, and control based on their agreement, and it is often formalized through a contract.

Summary

Canada offers a diverse array of legal entities for individuals and groups looking to conduct business. Each entity has distinct characteristics, benefits, and liabilities, allowing individuals to choose the structure that best suits their needs and objectives. It’s crucial for entrepreneurs and business owners to understand these entities to make informed decisions about their business structure and operations.