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Comparative table of the various legal forms
Advantages
Corporation
Shareholders' personal liability limited to their investment
Lower corporate tax rate than individuals
Sole Proprietorship
Low cost
Few formalities required to set it up
No distinct assets between the individual and the company
Ideal for self-employed workers (up to a certain income)
Non-profit Organization
Sometimes easier to access government grants in certain areas
Issuing charitable receipts (if registered with CRA as a charitable organization)
Limited personal liability of founders
Partnership
Less expensive to set up
Few formalities required to set it up
Simple to operate: the general partnership is bound by an agreement as well as the law
Disadvantages
Corporation
More expensive to set up and to maintain
Several formalities to set up
Sole Proprietorship
Unlimited personal liability for debt
Tax income rate identical to individual tax rate
The death of the individual terminates the sole proprietorship
Non-profit Organization
Restriction on the number of founders depending on the type of constitution
Set-up and administrative procedures are costly
Partnership
Unlimited and shared personal liability of partners
Tax rate identical to the individual tax rate
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