- Sole proprietorships
Sole proprietorships are relatively inexpensive to set up, and most of the time, they don’t require many legal formalities. As a sole proprietor, you will be classified as fully self-employed, meaning all benefits from the business (such as income and assets) will accrue exclusively to you. However, this also means that all obligations (including business loss and contractual liability) will be your responsibility.
When two or more persons (individuals or corporations) do business intending to profit, their relationships may be classified as a partnership. More specifically, in a general partnership, you and at least one other person will share the management of the business, each partner being personally liable for all debts and obligations incurred. Partnerships in BC, including general partnerships, are governed by the BC Partnership Act.
The advantages of a general partnership usually include how easy they are to form, the low start-up costs, limited regulation, the broader base for management of the entity, and the possibility of obtaining tax advantages.
The disadvantages usually include the fact that there is unlimited liability for the partners, that raising additional capital is not as easy as compared to a corporation, that conflict between the partners may develop, and that there is no name protection.