Forms of Business Organization

Essay by dejavu78 July 2006

download word file, 3 pages 4.8

From a legal point of view, there are four types of businesses:

1. Sole proprietorships;

2. Partnerships;

3. Corporations; and

4. Co-operatives.

A brief description of each type is followed by a summary of their advantages and disadvantages. For specific information on how or where to register or incorporate a business, contact your local CBSC.

Sole Proprietorships

This is the simplest way to set up a business. A sole proprietor is fully responsible for all debts and obligations related to his or her business. A creditor with a claim against a sole proprietor has a right against all of his or her assets, whether business or personal. This is known as unlimited liability.

This type of business comes under provincial jurisdiction. If the proprietor chooses to carry on a business under a name other than his/her own, he/she must register with the province. Your business name registration, or renewal of registration, will be valid for a certain number of years.

Call your local Canada Business Service Centre to determine when business name registrations need to be renewed in your jurisdiction.

If a sole proprietor establishes a business in his/her own name, without adding any other words, it is not necessary to register the business.


A partnership is an agreement in which two or more persons combine their resources in a business. In order to establish the terms of the business and to protect partners/shareholders in the event of disagreement or dissolution of the business, a partnership/shareholders agreement should be drawn up with the assistance of a lawyer. Partners share in the profits according to the terms of their agreement.

General Partnership

All members share the management of the business and each is personally liable for all the debts and obligations of the business. This means that each partner is...