Sole proprietor vs corporation — choosing your structure
Lesson 1 of 11 in Self-Employment & Small Business Setup · 22 minutes
The two main legal structures for Canadian small businesses. Different tax treatment, different liability, different paperwork. This lesson covers the choice.
What you'll learn
- Distinguish sole proprietorship from corporation
- Compare tax treatment of each
- Identify when to incorporate
- Understand limited liability
From the lesson
If you're starting a Canadian business, your first decision is the structure. Most newcomers default to sole proprietor (simpler, cheaper) and incorporate later when they grow. But the right choice depends on your specific situation. This lesson is the practical comparison.
Before you start: Can I legally run a business?
Check your status first. This comes before any registration.
• Canadian citizens and permanent residents: yes, you can be self-employed. • Open work permit holders: yes, in most cases. Check the conditions on your permit. • Employer-specific (closed) work permit holders: no. Your permit lets you work only for the employer named on it. You cannot be self-employed. • Study…