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Forms of Business Organizations in Yukon

Empowering Entrepreneurs trough Entrepreneurship & Technology www.e42canada.com Forms of Business Organizations in Yukon, Canada Now that you have decided to start your own business, you will have to determine what business structure or form of organization suits your needs. The structure of your business will depend on whether you want to run your business yourself or with a partner or associates. There are four types of business structures: sole proprietorships, partnerships, corporations an
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    Empowering Entrepreneurs trough Entrepreneurship & Technology  www.e42canada.com Forms of Business Organizations in Yukon, Canada Now that you have decided to start your own business, you will have to determine what businessstructure or form of organization suits your needs. The structure of your business will depend on   whether you want to run your business yourself or with a partner or associates. There are four types of    business structures: sole proprietorships, partnerships, corporations and cooperatives.1. Sole Proprietorship2. Partnership3. Corporation4. Co-operatives5. Non-Profit Sole Proprietorship This is the simplest way to set up a business. A sole proprietorship is fully responsible for all debts andobligations related to his or her business. A creditor with a claim against a sole proprietor wouldnormally have a right against all of his or her assets, whether business or personal. This is known asunlimited liability.This type of business comes under provincial jurisdiction. If the proprietor chooses to carry on a   business under a name other than his/her own, he/she must register with the province.If a sole proprietor establishes a business in his/her own name, without adding any other words,registering the business is not necessary. Filing a Declaration of Trade Name to protect your businessname is strongly recommended.To register now online your business name in Yukon, please  continue here Advantages - Low start-up costs- Greatest freedom from regulation- Owner in direct control of decision-making- Minimal working capital required- Tax advantages to owner   - All profits to owner Disadvantages - Unlimited liability- Lack of continuity in business- Organization in absence of owner- Difficulty raising capital Partnership A partnership is an agreement in which two or more persons combine their resources in a businesswith a view to making a profit. To establish the terms of the partnership and to protect partners incase of a disagreement or dissolution of the partnership, a partnership agreement should be drawn upwith the assistance of a lawyer. Partners share in the profits according to the terms of the agreement.There are two different types of partnerships:    Empowering Entrepreneurs trough Entrepreneurship & Technology  www.e42canada.com a) General Partnership All members share the management of the business and each is personally liable for all the debts andobligations of the business. This means that each partner is responsible for and must assume theconsequences of the actions of the other partner(s). b) Limited Partnership In a limited partnership some members are general partners who control and manage the business,and may be entitled to a greater share of the profits. Other partners are limited and contribute onlycapital; they take no part in control or management and are liable for debt to a specified extent only. Alegal document, setting out specific requirements, must be drawn up for a limited partnership.All partnerships must be registered. To register now a new partnership in Yukon, please  continue here   Advantages - Ease of formation- Low start-up costs- Additional sources of investment capital- Possible tax advantages- Limited regulation- Broader management base Disadvantages - Unlimited liability- Lack of continuity- Divided authority- Difficulty raising additional capital- Hard to find suitable partners- Possible developments of conflict between partners Corporation A corporation is a legal entity that is separate from its owners, the shareholders. No member of acorporation is personally liable for the debts, obligations or acts of the corporation, except underspecial circumstances. This type of business can be incorporated at either the federal or provinciallevel.A corporation is identified by the terms “Limited”, “Ltd.”, “Incorporated”, “Inc.”, “Corporation”, or    “Corp.”. Whatever the term, it must appear with the corporate name on all documents, stationery, and   so on, as it appears on the incorporation document. a) Provincial Corporations Corporations can issue shares or securities to the general public or they can choose to issue themprivately. Those with 15 or fewer shareholders that do not sell to the public are the most private and   least regulated of all corporations. To incorporate now a new corporation in Yukon, please  continue here.   b) Federal Corporations   Corporations may also be incorporated federally under the Canada Corporations Act. A firm operatingnationally or in several provinces may find this advantageous. A federally incorporated business muststill register in each province in which it does business. To incorporate a new Canada federalcorporation, please  continue here.      Empowering Entrepreneurs trough Entrepreneurship & Technology  www.e42canada.com Advantages - Limited liability- Specialized management- Ownership is transferable- Continuous existence- Separate legal entity- Possible tax advantages (i.e. lower small business tax)- Easier to raise capital Disadvantages - Closely regulated- Most expensive form to organize- Charter restrictions- Extensive record keeping necessary   - Double taxation of dividendsImportant: Keep in mind that once incorporated or registered, a legal entity such as a corporation, anextra-provincial registration or a nonprofit society has obligations and responsibilities in order toremain in good standing with the Corporate Registry record. Filing an Annual Return is onerequirement that is common to all legal entities, with the exception of Business Names. Co-operatives A cooperative is a business organization started by people who want to use services or buy goods as a   group, have an equal say in how the business is run and share in any profits the business makes. Theirbusiness structure ensures that:- all members have an equal say (one vote per member, regardless of the number of shares held)open and voluntary membership limited interest on share capital- surplus is returned to members according to amount of patronage Co-operatives are placed in five separate categories when they are classified by function:1. Producer cooperatives combine members’ skills and resources for mutual benefit. An example isan employment co-operative, which pools and markets the skills of the employee-members andprovides them with an income. 2. Consumer co-operatives buy commodities in bulk and sell them to the member-owners.Examples are retail co-operatives and direct-charge co-operatives. 3. Marketing co-operatives sell their members’ products. Typical products are dairy products,poultry, fish and handicrafts. 4. Financial co-operatives provide a variety of financial services for their members includingsavings, investment and loans. Examples are credit unions, co-operative trust and insurancecompanies. 5. Service co-operatives enable members to improve the quality, price and availability of needed   services, such as health care, child care and transportation.    Empowering Entrepreneurs trough Entrepreneurship & Technology  www.e42canada.com Advantages - Owned and controlled by members- Democratic control by one member, one vote- Limited liability- Profit distribution (surplus earnings) to members in proportion to use of service; surplus may beallocated in shares/cash Disadvantages - Possibility of development of conflict between members- Longer decision making process- Requires members to participate for success- Extensive record keeping necessary- Less incentive to invest additional capitalThis information have been adapted from the Guide for New Yukon Businesses, Yukon Business Link. Enterprise42 Canada  Empowering Entrepreneurs through Entrepreneurship & Technology.www.e42canada.cominfo@e42canada.com
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