Business Structures
Which Ontario business structure should you choose?
Compare the common Ontario business structures side by side. We won't tell you which one to pick — that's a conversation for a lawyer or accountant.
| Structure | Ownership | Liability | Registration | Admin | Tax | Continuity | Typical use |
|---|---|---|---|---|---|---|---|
| Sole Proprietorship | One individual | Owner is personally liable | Register business name (if not using legal name) | Minimal — no separate legal entity | Reported on the owner's personal tax return | Ends when owner stops or dies | Freelancers, side businesses, solo services |
| General Partnership | Two or more people | Partners are personally liable, often jointly | Register partnership name; partnership agreement strongly recommended | Low, but partnership disputes are common without an agreement | Income flows to each partner personally | Ends on partnership change unless agreement provides otherwise | Co-founded services, professional partnerships |
| Ontario Corporation | Shareholders | Corporation is separate — limited liability (with important exceptions) | File articles of incorporation with the Ontario Business Registry | Higher — directors, minute book, annual returns | Separate corporate tax return; owners taxed on salary/dividends | Continues indefinitely, independent of ownership changes | Growing businesses, businesses with liability exposure, tax planning |
| Federal Corporation | Shareholders | Corporation is separate — limited liability (with exceptions) | Incorporate federally with Corporations Canada; often also extra-provincial registration | Similar to Ontario corporation plus extra-provincial requirements | Separate corporate tax return | Continues indefinitely | Businesses operating across provinces or with national branding needs |
| Not-for-Profit Corporation | Members (no shareholders) | Corporation is separate; directors have specific duties | Incorporate under Ontario or federal not-for-profit legislation | By-laws, members, annual returns; charitable status is separate | Tax-exempt when qualifying; charitable status has its own rules | Continues indefinitely | Community organizations, associations, charities |
Things to consider
- How much personal liability exposure does the business have?
- How important is limited liability vs administrative simplicity?
- Are you planning to bring on investors or additional owners?
- Do you want to build a business that continues past you?
- Where will you operate — one province or several?
Questions to ask a lawyer or accountant
- Given my expected income, is incorporation tax-efficient today?
- What share structure should I set up if I want to add owners later?
- Do I need a shareholders' agreement or partnership agreement?
- How will my liability actually change if I incorporate?
- Do I qualify (or plan to qualify) for the lifetime capital gains exemption?