Organizing Your Business

STAGE 7

ORGANIZING YOUR BUSINESS

100 200 300 500400 600 700

Sales Revenue (thousands of dollars)

100

200

300

400

500

600

700

Exp

ense

s (t

ho

usa

nd

s o

f d

oll

ars)

Fixed Expenses

Loss Area

Breakeven Point

Total Costs

Sales

Profit Area

ORGANIZE YOUR BUSINESS

Select the organizational structure for your business

SoleProprietorship

Partnership Corporation

Select andregister a

business name

Select and registera partnership name

Select a corporate

name

Draw up apartnershipagreement

Draw uparticles of

incorporation

File for incorporationwith provincial or

federal government

Comply with provincial licensing

requirements

Comply withmunicipal licensing

requirements

Deal withmandatorydeductions

Consideremployment

standards

SOLE PROPRIETORSHIP VS.GENERAL PARTNERSHIP

AdvantagesSimple and inexpensive

to start

Individual control over operations

All profit to the owner

Losses deductible from any other income

DisadvantagesUnlimited liability

More difficult to obtain financing

Limited resources and opportunity

FORMS OF BUSINESS ORGANIZATIONSOLE PROPRIETORSHIP

AdvantagesPooling of financial

resources and talents

Simplicity and ease of organization

Increased ability to obtain capital

Potential for growth

DisadvantagesUnlimited liability

Divided authority

FORMS OF BUSINESS ORGANIZATIONPARTNERSHIP

AdvantagesLimited liability for

limited partners

DisadvantagesCentralized

management

Difficulty in changing ownership

FORMS OF BUSINESS ORGANIZATIONLIMITED PARTNERSHIP

ACOA EntrepreneursCOWS Ice cream

Making of the world’s best ice cream

AdvantagesLimited liability

Continuity of the business

Easier to raise capital

Potential employee benefits

Tax advantages

DisadvantagesCost

Legal formalities

Inability to flow losses through to the shareholders

Need for personal guarantees

FORMS OF BUSINESS ORGANIZATIONCORPORATION

Licenses and Legal Requirements

STARTING A HOME BASED BUSINESS

Licences and Permits Municipal

Provincial

Land Use and Zoning

Mandatory Deductions Income Tax

Employment Insurance

Canada Pension Plan

Taxes Provincial Sales Tax

GST/HST

Employment Standards Work Safe NB

OTHER LEGAL REQUIREMENTS

OTHER LEGAL REQUIREMENTSINSURANCE