A business for profit can be carried on under any one of a number of forms of organization, each with its own advantages and disadvantages. These would include Sole Proprietorships, Partnerships, and Corporations. The decision to incorporate depends on your personal needs and goals. At MoJo’s our qualified staff can assist you with your registration and filing needs in these corporate areas, however cannot provide you with any legal or accounting advice. Liability and taxation issues can be complex, we recommend consultation with your lawyer and/or accountant. The following has been compiled only to provide you some insight into the different forms of business organization.
Sole Proprietorships are legislated under the Partnership Act(Alberta). In general terms it stipulates that each person who is engaged in business for trading, manufacturing, contracting or mining purposes and not associated in partnership with any other person or persons, and who uses a name other than their own (or with something in addition to) shall sign and file with the Registrar a declaration in writing of the fact. This process has become commonly referred to as registering a Trade Name.
Partnerships arise as soon as there are two or more persons carrying on a business in common with a view to profit. In addition to an ordinary Partnership, the Partnership Act (Alberta) Also provides for Limited Partnerships and Limited Liability Partnerships. The relationship between members of any company or association who constitute a corporation under any law in force in Alberta is not a partnership within the meaning of the Partnership Act.
With Trade Names and Firm Names (Partnerships) there is little name protection. Two people can in effect register the identical name. There is no right of ownership attached to registration of a Trade Name. What it does provide is proof of use of the trade name from the date of registration.
Incorporations come under the provisions of the Business Corporations Act (Alberta). When you incorporate, you are in effect creating a new legal entity that has the same powers as any individual. The new corporation has an independent existence that is separate from its shareholders. A corporation can acquire assets, go into debt, enter into contracts, sue or be sued. There are higher start up costs associated with incorporating, as well as an increased number of annual filings and records that are required to be kept. Your corporation for example will also file its’ own tax return.
The Business Corporations Act and its regulations control the use of names for corporations. It prohibits the use of a name that is identical to the name of another corporation incorporated or registered in Alberta, as well as any Canada Corporations. When choosing your corporate name you do not want it to be confusingly similar with another corporation. The suggested practice is that it should have three parts. There should be a Distinctive Element, a Descriptive Element, ending with the required Legal Element. In Alberta those are Ltd., Corp., Inc., Corporation, Limited, or Incorporated.