The answer to this question will depend on a number of variables as well as your personal goals and comfort levels. While we’re unable to give you a definitive answer, we can highlight a few factors to keep in mind when making your decision:
| Business Registrations | Incorporations |
|---|---|
| Simpler to set up than a corporation | Can be more complex to set up than a business registration |
| The proprietor or partners are directly responsible for debts related to the business |
No shareholder of a corporation is personally liable for the debts, obligations or acts of the corporation |
| A creditor with a claim against a sole proprietor has a right against all of his or her assets, whether business or personal (unlimited liability) | The corporation is a legal entity on its own and often assumes liability for debts and obligations, along with the directors and officers to a (sometimes) limited extent. PLEASE OBTAIN LEGAL ADVICE ON THIS SUBJECT |
| Jurisdiction is Provincial | Jurisdiction can be Provincial or Federal |
| Business Registrations in Ontario are valid for 5 years and must be renewed in order to remain valid. |
Incorporations do not need to be renewed but additional initial and annual filings are necessary. |
| Businesses do not need to appoint additional positions. | Corporations need to set out their board of directors (at least 1) and officers (who run the corporation’s day-to-day operations) with an additional Initial Notice filing. |
| An identical name to that of your business can be registered and name protection is more difficult to enforce. |
The corporate name is protected across Canada. |
| A name reservation, while recommended, is not mandatory. |
A name reservation is mandatory prior to incorporation. |
| Less costly to set up than corporations | More costly to set up than Business Name registrations |
| A sole proprietor carrying on business in their own name without the addition of any other words does not need to file a business name registration |
