Comparing the basics of a sole proprietorship, partnership and corporation.

You’ve decided to take control of your destiny, be your own person, and do your own thing. GREAT! You have a sound business plan and the drive and skills necessary to succeed. Now all you need to do is get started – but how? The first thing to do is to decide how you are going to carry on your business: as a sole proprietorship, partnership or corporation. Here is a simple comparison to get you thinking:

SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION
     
you own and operate yourself, the proprietor and his or her business is considered one and the same joint effort between 2 or more people, each partner is liable for the actions of the other is an independent personality, a separate legal entity
     
you run the business using your own personal bank account, all profit or loss is yours alone partners share equally the capital and profits of the business, a business bank account is easier the owner is a shareholder of the corporation but s/he does not own the assets
     
keep separate financial records keep separate financial records the corporation keeps its own complete set of financial records
     
business profits are reported on your personal income tax business profits are reported on your personal income tax profits and losses are held within the corporation
     
the sole proprietorship dies with the owner the business may not survive the death of a partner a corporation can live forever as long as it is registered with the Corporate Registry
     
you are personally liable, not covered by any specific legislation partnerships are governed by The Partnership Act the corporation is liable for its business debts not the owners
     
cost of setting up – optional: may wish to search and register your trade name cost of setting up – may or may not have to file a Declaration of Partnership with Corporate Registry cost of setting up – sizeable corporation fees, possible legal, bookkeeping & tax preparation fees