Sole proprietorship is the simplest form of business structure. It’s easy to set up and you don’t even need to register if you use exactly your own name in your business. Your business income is your personal income and will be included in your personal tax return. You will be liable for all debts and/or obligations of your business. In other words, creditors or lenders can claim against all your personal and business assets.
Partnership is similar to Sole Proprietorship except there are two (2) or more owners. An agreement is usually signed before entering into a partnership. You and your partner(s) will share business income according to terms and conditions of the agreement. Business income is reported in each partner personal income tax return. Again, you and your partner liabilities are unlimited here.
Corporation is a separate legal entity, thus separating the owners from the business itself. The owners (shareholders) of a corporation are not personally liable for debts and/or obligations of the corporation. Corporation must file tax return separately from its owners. Canadian Controlled Private Corporation is eligible for a lower rate income tax for the first $500,000,- of its business income.
Co-operative is a form of corporation which is owned by an association of members. Co-operative is formed in a situation where a group of members decide to pool their resources to provide their patrons with goods, services, or other benefits.
We now have concluded Introduction of Accounting: Part I to V: