The prospects of starting a new business in Alberta are exciting. However, proper planning is crucial to the business’ success. Choosing between the various business structures is essential because it will affect other decisions, and compliance with business law and tax laws from the onset is vital. It is only natural to have many questions, and approaching the right person for answers is essential. The options are sole proprietorship, partnership and incorporation.
A frequently chosen option is a sole proprietorship because it is easily created and informal. In this structure, legal and tax authorities see the operator and the business as one, which is an advantage in that income gained can be reduced by business losses. However, a sole proprietor is responsible for all business functions and personally liable for business debts. A partnership is not much different from the sole proprietor business structure, although it has two or more partners, typically with a contractual agreement. An agreement typically determines the percentage of each partner’s share of tasks, expenses, and revenue income for the day-to-day running and when preparing tax returns.
Incorporation is seldom the choice of business structure for new businesses because it is significantly more costly than the other two options. Companies that operate internationally or in multiple provinces choose this structure, as do businesses that sell shares to acquire capital. Corporations’ financial records must be reported to governing authorities annually, and qualified accountants must audit the financial statements.
These are but a few of the essential details and options for choosing the perfect business structure in Alberta that complies with business law. To start a company on the best possible foundation is to consult with an experienced business law lawyer. After assessing the client’s unique circumstances, legal counsel can explain all the options and laws applicable to each business structure. This will allow the prospective business owner to make informed decisions. Furthermore, the lawyer can provide ongoing support and guidance as the business grows.