How do I compare a sole proprietorship to a company in British Columbia?
The primary difference between a sole proprietorship verses a company in BC lies in tax treatment, liability and government regulation.
Some basic conceptual points to get started:
- in British Columbia a ‘corporation’ is referred to as a ‘company’ in our Provincial legislation and often in practice, although most lawyers use the terms interchangeably;
- a company is a separate legal person like you and I, which essentially means that just because a company does something, does not mean that its shareholders (ie the owners of the company) have done that same thing, or are necessarily bound by the same obligations and liabilities; and
- establishing a company is not a simple matter of submitting an incorporation online through the BC Corporate Registry. Individuals who hold an interest or position in a company need to have specific documents and rules of governance in order to validly exist, enter into agreements, evidence share ownership, have acting directors and officers and comply with required legislative procedures.
A sole proprietorship in Canada requires minimal start up costs and the owner singularly determines what goods or services are sold and how they are delivered. However, the owner is personally responsible for every aspect of the company, including assets and liabilities.
On the other hand, incorporating a company involves a legal expense. However, companies can have creative organizational structures, tax advantages and in many cases, can shield owners from personal liability.
Contact Incorporate BC to schedule a free in-person consultation to discuss whether incorporating is appropriate for your business.
Incorporate BC
Incorporate BC connects business owners with local corporate lawyers to help them with incorporating their business.
