The Sole Proprietorship in Canada

What is a sole proprietorship? This is one of the more common small business start up models because of it's ease in set up and management compared to some other forms of business.!

A Sole Proprietorship is a business where one person is the sole owner, sometimes called a 'partnership of one.' The liability rests on this person alone for all debts incurred by his or her business. As opposed to a partnership where the liability is divided among the partners and a corporation where the liability is limited to the amount of the company's assets, the sole proprietor is liable for business debts.

In starting a sole proprietorship, assuming you already have your plan for business and all of those details already worked out, you will have to next consider a few points.

Business name (in Canada)
If you are going to do business under your personal name, meaning that your company will be called what your name is, for example a company called "Tom Smith" with no additions such as "& Sons," or anything else then you do not have to register your business and your business income is calculated as personal income on your tax return. If your company or business will have a different name, such as "Tom's Bakery," or "Fred's Consulting," you will have to register that name to do business.

Before you register the appropriate government office will do a name search to make sure your name is not already taken. To save time and money you can also do a search yourself on the internet for your corresponding province. For example in Nova Scotia you would search with the registry of Joint Stock Companies found online at http://www.gov.ns.ca/snsmr/rjsc/ then to do a name search you would click on the links that bring you to http://www.gov.ns.ca/snsmr/rjsc/search.asp and enter the name you wish to search, the results will tell you if your name is in use or not.

After you do your own name search you will submit an Application for Name Reservation, this costs $57.50 in Nova Scotia for a Canada wide search. If your name is approved you will find out usually within 2 or 3 days and can usually check it on the internet, or by mail. It will be reserved for 90 days within which time you have to register the business or the name will be again made available. The business registration cost is 50.00 / year. Once you register you will receive a Certificate of Registration. You also get a Business Number (BN), a common business identifier. This is assigned by the Canada Customs and Revenue Agency (CCRA, formerly Revenue Canada). The fees and processes may vary from province to province and in the territories of Canada. Check below for links to the appropriate government office for more information.

Tax: A sole proprietorship does not need GST/HST registration number or collect sales tax until it reaches $30,000.00 in sales. Business income and personal income are regarded as the same in a sole proprietorship.

Advantages
- Ease of set up: simplest and least expensive business organization to set up.

- Low start-up costs: sole proprietorship usually has low start-up costs.

- Minimal registration requirements: certificate of compliance, business license, registration of business name, and GST/HST registration.

- Owner has complete control: sole proprietor is boss

- Government regulations: minimal government stipulations to follow.

- Tax advantages: lower tax rate and losses may be applied against other income of proprietor.

- Continuity of business: sole proprietorship will continue till business owner's death or if he/she decides to dissolve business.

Disadvantages
- Unlimited liability: creditors can look beyond business assets to the proprietor's personal assets for payments.

- Difficulty in obtaining start-up costs: the amount of equity that can be raised is limited to the proprietor's personal wealth.

- Due to the risk of sole proprietorships, it is often difficult to obtain financing.

- Employment insurance benefits: if the business does not succeed the sole proprietor is not eligible to collect employment insurance benefits.

- Tax disadvantage: profits must be added to personal income.

- Termination of business: legal life of business terminates with death of business owner.

For more information visit these links:
Canada Customs and Revenue Agency: Business Registration site: Registering a Business in Canada. http://www.businessregistration.gc.ca/ Canada wide, can be used for all places in Canada.

Nova Scotia : Registry of Joint Stock Companies http://www.gov.ns.ca/snsmr/rjsc/
Name reservation $57.50, Business Registration $50.00

Ontario : Ministry of Consumer and Business Services http://www.cbs.gov.on.ca/obc/english/4TJTBS.htm
Online application $60.00, by mail $80.00, name search 12.00 (optional).

British Columbia : http://smallbusinessbc.ca/workshop/busforms.php
Name search $30.00, Registration $30.00.

Alberta: http://www.cbsc.org/alberta/main.cfm or check this site for lots of other great Alberta Info. http://www.cbsc.org/alberta/search/display.cfm?
Code=8002&coll=AB_PROVBIS_E

Saskatchewan : http://www.saskjustice.gov.sk.ca/
Name search $60.00, registration $ 60.00

Manitoba : Here and also http://www.gov.mb.ca/cca/comp_off/register_or
_incorporate.html for information.
Name reservation $30.00, name registration $45.00.

Quebec information: http://businessgateway.ca/en/hi/prov/qc/e-forms.cfm

New Brunswick : Here: Note - same as Nova Scotia, as per a reciprocal registration agreement.

Prince Edward Island : http://www.cbsc.org/pe/english/display.cfm?Code=5107&coll=PE_PROVBIS_
Name reservation $40.00, Name registration $60.00.

Newfoundland and Labrador: http://bsa.cbsc.org/gol/bsa/interface.nsf/engdoc/5.8.2.html

Canada 's Territories: see the federal information site: http://www.businessregistration.gc.ca/