TYPES OF BUSINESS REGISTRATION IN BC
In Canada, registering your business is almost identical across the board, but the details are different in each province and territory. Registering your business allows one to file taxes, pension, EI premiums, and if you hire workers, WorksafeBC payments. This article will guide you through the process you need to follow to get your new sole proprietorship, partnership or incorporated business legally set up in B.C.
Before we Get Started
One of the first steps before registering your business is to come up with a business name. Consider getting an NUANS (Newly Upgraded Automated Name Search) report to make sure your business’ name isn’t too similar to another already in existence. Unlike sole proprietorships and partnerships, corporations must have a unique name. To speed up the incorporating process a corporation can, at the request of the people who incorporate the corporation, be assigned a number as its corporate name (for example, 123456 Canada Inc.).
Choose a Form of Company Ownership
Now that you have a name chosen and approved, you will need to figure out how your new business will be structured legally. In BC there are 3 types of businesses, Sole Proprietorship, Partnership or Incorporation.
If you structure your business as a sole proprietorship, you become the sole owner. It also means that you will be responsible for any debts or obligations incurred by the business.
Pros of Sole Proprietorship:
– Simplest business structure to set up—faster and less complicated
– Less paperwork to manage
– Do not have to share decision-making or management responsibilities with other partners
– Simpler tax preparation and filing
– Keeps your costs low
– Reduces some of the government regulatory considerations
– Appropriate for businesses that are relatively low risk
– Effective structure for testing a business idea
Cons of Sole Proprietorship:
– You assume all debts and obligations incurred by your business
– You have unlimited liability—your personal assets may be seized if the business cannot meet its financial obligations or is sued.
In BC, to registering for a Sole Proprietorship is the easiest to obtain. You can do it online through BC Registry Services for $40, or $99 for in person. It takes only 2 days to be approved. Compared to Ontario, for a sole proprietor business registration it will cost you $60.
A partnership is when two or more individuals or corporations do business together in partnership. A partnership can be a very flexible business structure—you can expand or limit liability and decision- making authority to suit your business’ needs.
Pros of a Partnership:
– More invested people to spread out management duties
– Extra set of hands
– Bridging the gap in expertise and knowledge
– Reduced financial burden
Cons of a Partnership:
– More risk of taking on liability for your partners actions
– Split profits
– Potential disagreements
In BC, Partnership is just as easy obtain as Sole Proprietorship. The cost is $40 and it is done online as well. There are another 2 partnership options that have a different registration fee and process. A limited partnership (LP) can have general and limited partners. Generally speaking, there’s a limit on the liability of a limited partner, while the general partner’s legal liabilities are not limited. As well as a limited liability partnership (LLP) is has no general partners and all partners have limited legal liability. In BC you will have to pay $165 for a limited partnership or $275 for a limited liability partnership. In Alberta it’s a little more straightforward, you pay $147.00 per partner plus additional fees.
Corporations have rights and responsibilities similar to individuals, and offer you limited liability as a business owner. Your personal responsibilities are completely separate from your business’. However, in some cases you could still be held legally accountable should you do anything negligent or fraudulent. To start a corporation, you must submit an application to either the federal government or the provincial government (not both). In general, you should incorporate federally if you plan to do business in multiple provinces across Canada.
Pros of a Federal Corporation
– Allows your business to operate in any province in Canada
– Makes it easier to protect your name across Canada
– Better if you have multiple offices in multiple provinces across Canada (although you still have to extra-provincially register your business in any province you operate in, even after you incorporate federally)
-At least 25% of your business directors must be Canadian residents. If there are fewer than four directors, at least one must be Canadian
– If you’re thinking about having business partners or hiring employees
– If you’re making substantial revenue (i.e. more than $50,000)
– If it’s required to get hired for a contract or to go on-site
– If you need a WCB account
– If you’re signing a commercial lease or signing a major contract
– If you’re making or selling a product
Cons of a Federal Corporation
– More expensive to form, organize, and manage
– You must meet certain government requirements every year to keep your corporation in good standing.
– You must keep annual shareholder meeting minutes, a list of directors, a registered office address, and more to be included in your minute book.
To register for a corporation, you must decide first if you would rather register provincially or federally. The federal incorporation fee is $200 plus any additional province you wish to do business in.
Jurisdiction Incorporation Fees
British Columbia $352
New Brunswick $312
Nova Scotia $417
Prince Edward Island $265
Moreover, if you are incorporating a federal corporation, you must also register extra- provincially. Currently, the provincial fees for a federal corporation which has its registered office in that province are (these are in addition to federal incorporation fee of $200 indicated above):
Province Extra-Provincial Registration Fee
British Columbia $391 (including name search $39)
Manitoba $349 (including name search $49)
New Brunswick $212
Nova Scotia $252
Northwest Territories $300
Prince Edward Island $260
Saskatchewan $340 (including name search $75)
Yukon Territory $335
One final note: Registering your business isn’t enough- you still have to make sure you have the right permits & licenses before you can start doing business. Many businesses will have to get municipal, provincial, and federal permits or licenses to operate! Check with the city you will be operating in to see the laws and regulations for your business.