DID YOU KNOW…
- That the total number of businesses incorporated in Alberta was up 8.7% year over year at the end of August 20221.
- OR that 4,149 businesses were incorporated in Alberta during the month of August 2022 alone, a 21.3% increase over the same period last year1.
- AND that a 2019 Canadian Federation of Independent Business report ranked Grande Prairie #6 on a list of the top 10 mid-sized Canadian cities for entrepreneurship in 20182.
It’s no surprise you too may be thinking about starting a new business. While you may be among many other talented entrepreneurs, the idea of getting started can seem overwhelming. Often one of the first hurdles is structuring your business. You may be familiar with some of the terms but unsure what they “really” mean. Here, we attempt to break down the basics for you. Some common business structures include:
SOLE PROPRIETORSHIP
This is a one wo[man] show! You call all the shots but you also carry all the risk, personally3. In the eyes of the law you and your business are one in the same3. Getting started as a sole proprietor is easy, and begins with registering your business name per s. 110(1) of the Alberta Partnership Act.
PARTNERSHIP
Sometimes two (or three, or four…) is better than one! And if that’s your situation, then you may be considering a partnership. In this type of business, you and your partners would carry the risk associated with the business and would be liable together for any debts incurred by the partnership4.
LIMITED PARTNERSHIP (LP)
Maybe the idea of a partnership sounds like a little more than you were bargaining for. Perhaps you, or one of your partners wants to minimize their liability. If that’s the case a LP may be the right fit. Here the LP is liable for their investment or agreed investment into the business, and nothing more5.
LIMITED LIABILITY PARTNERSHIP (LLP)
To form an LLP in Alberta you must be part of a “eligible profession” set out by statute6. Forming an LLP allows those of the same profession to work together while also protecting them from liability associated with any debts, malpractice, negligence etc. of their partners7.
JOINT VENTURE (JV)
Generally speaking, JV’s are limited to parties coming to an agreement regarding a specific project8. A lawyer can help you understand if this is the right fit for your project and the associated risk.
CORPORATION
There are many benefits associated with incorporating your business and if you’re looking for more information a great place to start is our previous blog post Incorporating a Business/Starting a Business.
Of course, there is more to each of these business structures. That’s what our corporate lawyers in Grande Prairie are here for. At Hayes-Fry law we pride ourselves on taking the time to get to know you, your business objectives and your goals. This allows us to properly educate you on each of your options so that you feel comfortable with whatever structure you decide to move forward with.
Give us a call today at 780.831.7370 or email reception@HayesFryLaw.ca and we’d be happy to set you up for a consultation with one of our corporate lawyers who can help you get your business in Grande Prairie off the ground.
WORKS CITED
- Government of Alberta, “Business Incorporations” (September 8, 2022), online: Economic Dashboard < https://economicdashboard.alberta.ca/BusinessIncorporations>.
- Canadian Federation of Independent Business, “Entrepreneurial Communities” (April 2019) at pg. 3, Online(pdf): < https://www.cfib-fcei.ca/hubfs/legacy/2019-04/Entrepreneurial-Communities-2018.pdf>
- Poonam Puri et al, Cases, Materials and Notes on Partnerships and Canadian Business Corporations, 6th ed (United States: Thomson Reuters, 2016) at pg. 1.
- Partnership Act, RSA 2000, C P-3,S. 11(2).
- Partnership Act, RSA 2000, C P-3,S. 57.
- Partnership Act, RSA 2000, C P-3,S. 81.
- Partnership Act, RSA 2000, C P-3,S. 12(1).
- Poonam Puri et al, Cases, Materials and Notes on Partnerships and Canadian Business Corporations, 6th ed (United States: Thomson Reuters, 2016) at pg. 57