There are several advantages to each of the business types; let’s look at some of them.
Sole Proprietorship
- You have complete control and can make all decisions without involving anybody else.
- There aren’t many fees associated with getting it up and running.
- You get some tax benefits, such as the opportunity to deduct losses and costs from your taxable income.
- You are the only beneficiary of all earnings.
Partnership
- Setting up a partnership agreement is quite affordable, and the business is divided equally among you and your partners.
- Each partner is responsible for the partnership’s debts; thus, losses are shared, and gains are split among the partners.
- You and your partners can report your share of the loss on your tax returns if the partnership’s income is negative (i.e., the firm loses money).
- In the business, you have assistance and, ideally, complementing skill sets.
Corporation
- Because you keep your personal and business assets separate, it’s less probable that you’ll be personally responsible if the company goes bankrupt.
- A corporation will continue to exist even if the management changes, making it easier to pass on or sell the company.
- Shares might be sold to obtain funds for development or growth projects.
- Any shareholder can sell their shares to a third party outside the firm if there is no shareholder agreement in existence. This means that such a transaction will only be subject to the approval procedures outlined in the articles of incorporation. According to Canadian case law, these may not be able to prevent a share sale to an outside entity.
Cooperative
- The same as a corporation, it has limited responsibility.
- Profits are shared among the shareholders.
- A democratically elected government runs it.
