When starting a business, knowing the differences between Registering a Business or Incorporating can prove very helpful when it comes to your liabilities/responsibilities as a business owner.
With Registering a business, the liabilities, debts and higher tax brackets can affect your personal assets and while possibly placing you in a higher tax bracket if your business is doing well.
Types of Business Registrations
Sole-Proprietorship – is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.
Partnership – A partnership is a non-incorporated business that is created between two or more people. In a partnership, your financial resources are combined with those of your business partner(s), and put into the business. You and your partner(s) would then share in the profits of the business according to any legal agreement you have drawn up.
Rules and regulations of a business can be found in the Business Corporations Act
|Description||Incorporation||Master Business License|
|Liability Risk Level||Limited Personal Liability||Personally liable for all business damages|
|Tax Advantages||Possible Lower Tax Advantages||Owner(s) Personally Taxed|
|Name Protection for Business||YES – available with incorporation||NO|
|Renewable||YES||NO – license has to be renewed every 5 years|
|Ownership Change/Transfer||YES||NO (minimal exceptions made)|
|Name Change Flexibility||YES||NO (minimal exceptions made)|
|Address Change Flexibility||YES||YES|
|Added/Removed Individuals||YES||NO (minimal exceptions made)|
|Tax Requirements||Corporation taxes filed separately from individual(s)||Business taxes filed with personal tax returns|
|Start Up Costs||Minimum $200.00||$60.00|
|Agreements Required||Shareholder Agreement – If more than 1 shareholder||Partnership Agreement – if MBL is registered as general partnership|
A sole proprietor or a partnership business is the simplest way of operating a business, but before you decide on a business registration, you may want to consider a corporation.
Please contact ACLS to determine which kind of registration best fits your needs. ACLS offers free consultations and services you can afford.