1. Sole Proprietorship

This is the simplest way to set up a business. In a proprietorship, one person performs all the functions required for the successful operation of the business. The proprietor (owner) secures the capital, establishes and operates the business, assumes all risks, accepts all profits and losses, and pays all taxes. The owner is personally and totally responsible for any debts and contractual obligations. 

2. Partnership

A partnership is formed when two or more people combine their resources in a business with a view to making a profit.

General Partnership
In a general partnership, two or more owners share the management of a business, and each is personally liable for the debts and obligations of the business. This means that each partner is responsible for and must assume the consequences of the actions of the other partner(s).

Limited Partnership
Limited partnership involves limited partners, who combine only capital. They are not involved in managing the business and cannot be liable for more than the amount of capital they have contributed. This is known as limited liability.

A limited partnership also involves general partners, who are involved in management. They are fully liable for the debts and obligations of the business, but may be entitled to a greater share of the profits.

Both general and limited partnerships come under provincial jurisdiction. All partnerships are required to be registered with the Registrar of Companies.

The name of a new business must be registered if it is not incorporated. Proprietorships, partnerships, limited partner agreements and trade names must also be registered.

 3. Corporation

A corporation is a legal entity that is separate from its owners - the shareholders of the company. Each shareholder has limited liability. The directors and officers, however, carry additional liability. A creditor with a claim against the assets of the company would normally have no rights against its shareholders; however, in certain circumstances shareholders may be held liable. This type of business may be incorporated at either the federal or provincial level.

Provincial
If a company intends to carry on its activities solely in one province, provincial incorporation may be preferable. If a company wants to expand its activities outside of its provincial jurisdiction at a later date, it must obtain an extra-provincial license from every other province in which it wishes to carry on business. For more information, contact:

The Corporate Registry
PO Box 9417 Stn Prov Govt
Victoria, BC V8W 9V1
Tel: (604) 775-1041 (Vancouver number)

Federal
Under the Canada Business Corporations Act, any individual or corporation may receive a certificate of incorporation for any legal purpose with the exception of operating such institutions as banks, insurance companies, and trust and loan companies. For the appropriate documents, contact:

Corporations Canada
Industry Canada
#2000 - 300 West Georgia Street
Vancouver, BC V6B 6E1
Tel: (604) 666-9875
Fax: (604) 666-4274