02 - Choosing the Right Business Structure: What You Need to Know
When you're starting or growing a business, one of the first big legal decisions you’ll make is choosing a structure.
Should you stay a sole proprietor? Form a partnership? Incorporate provincially or federally?
This decision isn’t just administrative, your business structure affects your taxes, liability, credibility, and how easily you can grow. Sounds daunting? You’re not alone. Here’s what you need to know. (Leer en Español)
Why Your Legal Structure Matters
Choosing the right business structure can help you:
✔️ Protect your personal assets
✔️ Pay the right amount of taxes (and not more than you need to)
✔️ Build credibility with clients, banks, and investors
✔️ Position your business for growth and investment
Common Legal Structures for British Columbia Businesses
1. Sole Proprietorship
A business owned and operated by one person. A sole proprietorship is a simple and low-cost option where you and your business are legally the same. As an owner, you are considered to be self-employed.
Pros: Easy to start, minimal paperwork. The business can operate under the owner's personal name or a registered business name.
Cons: No separation between personal and business liability. The owner is responsible for everything.
2. Partnership
A business that is operated by two or more parties, who share ownership and profits.
Pros: Collaborative, shared startup costs.
Cons: Shared liability; can get complicated without clear agreements. One partner can make commitments on behalf of another partner.
3. Corporation
A separate legal entity with its own rights and responsibilities. The business can conduct business, own property, and enter into contracts. A corporation can carry on regardless of changes in ownership or the death of its shareholders.
Pros: Limited personal liability, tax planning opportunities, increased credibility.
Cons: More setup and maintenance; annual filings and corporate records required.
Provincial vs. Federal Incorporation
Businesses who are ready for incorporation should consider whether they wish to incorporate at the provincial or federal level.
📍 Provincial incorporation (e.g., in BC) is ideal if your business operates mostly within your home province.
🇨🇦 Federal incorporation gives you exclusive name rights across Canada and may be the right choice if you plan to expand nationally.
Each option has its own benefits, it depends on your brand, goals, and growth plans.
How a Lawyer Can Help You Decide
A lawyer can walk you through choosing or changing your business legal structure strategically, not just legally. Here’s how I support founders:
Reviewing your business model and growth plans
Identifying your risk areas and liability exposure
Setting up your structure with the right documents in place, from incorporation to operating agreements
Whether you’re just starting out or pivoting your business, you deserve clarity and peace of mind.
Mari’s Tip
If you’re already working with clients, hiring help, or building a brand you care about, it’s likely time to formalize your business structure and move forward with incorporation.
Ready to Feel Confident About Your Legal Foundation?
We work with entrepreneurs and founders, especially women-led businesses, to build legal foundations that protect and empower growth.
Book a legal clarity call to figure out what structure makes sense for you, and what steps to take next.
