Business Law

Sole Proprietorship and the information that matters.

If this is your first business, what steps should you take to make it successful and compliant?
First, decide what type of organization you would like to establish. These are the three main types of companies:
  • Sole Proprietorship
  • Partnership
  • Corporation
Although the above three types of organizations are effective means for a start-up business, it is essential to know that each category has specific requirements with the Business Registry.

As any business evolves, its legal structure can also develop and expand. You may start as a sole proprietorship, which may become a partnership if you find a great investor or someone who contributes fundamental business skills to grow your business.

If you decide that being a sole proprietorship is right for you, then make sure you have considered the following information:
  1. What are your legal responsibilities for registering the company?
  2. What are the requirements for filing your taxes?
  3. What type are your liabilities, and how can you minimize them?
Business Registration
If your company name differs from your legal name, you must register the business name under the Provincial Business Names Act.
As a sole proprietorship, you are not considered a separate entity, which means you must report your business income as part of your personal income. However, this allows you to claim losses from previous years or future losses if not claimed for prior years. Always consult an accountant for further guidance regarding your business’s tax needs.
The risks for a sole proprietor are much higher since all of their personal or professional assets may be seized to comply with their liabilities and obligations. In this case, you must determine if the risks of establishing a company as a sole proprietor will help your business or harm it.
Being a sole proprietor allows you to establish a family-oriented reputation and earn your client’s trust. However, documenting all transactions in writing—through contracts, emails, or texts—will safeguard your personal and business interests. This documentation will be vital in any future lawsuits. Additionally, review the contract for cooling-off periods that permit you to cancel the agreement shortly after signing, giving you time to consider any stipulations within the contract.
There are numerous advantages to operating as a sole proprietor, and this is crucial for all new businesses to consider. Additionally, there are ways to shield yourself from potential legal issues that are important to establish in the early phases of your business. If you’re launching your business, don’t hesitate to consult a lawyer to ensure you’re prepared to implement strategies that legally protect your business and assets.