1A: What is a business structure?

Have you decided to start a business in BC? Great! One of the very first things you’ll want to do is choose which legal structure your business will adopt. The structure you choose will have wide-ranging implications for you and your business. Making a decision can be a confusing and intimidating process, especially if you are not familiar with what business structures actually mean. That is why we have created this course: to give you the knowledge and tools you’ll need to make an informed decision. The main things you will learn in this course are:

• The main legal structures available
• The advantages and disadvantages of each
• The main criteria to consider when choosing a structure
• How to register your business for each structure

Throughout the course, you will be following the journey of Jamie: a fictional entrepreneur who’s been working in the construction industry for 8 years and now wants to start a contracting company. Jamie likes the idea of working independently, taking on projects as they choose, and being their own boss.

Photo by Josh Olalde

Now that you’ve met Jamie, let’s get started!

What is a Business Structure?

A business structure is the legal form that your company takes, as an organization, in the eyes of the law and in the eyes of tax authorities. In the case of Jamie, for example, whichever structure Jamie’s business takes shape in will have wide-ranging effects on how their business operates and their personal relationship to the business.

Why is it Important to make an Informed Decision?

Each structure will mean Jamie will pay taxes differently, either getting taxed on all the income through personal income tax, or having to pay corporate taxes, dividend taxes, etc. We will go over tax implications of each structure later on, as this will be a key consideration.

Furthermore, the company’s legal structure will determine Jamie’s level of legal involvement with the organization, i.e. whether Jamie is personally responsible for all of the company’s liabilities and debts or if there is a level of separation between Jamie’s own liabilities and the company’s liabilities.

These tax and legal implications will be the main criteria by which you choose a structure for your business. In the following lessons you will learn what the main structures are and the differences between them.