Business Law: Analysis of Canadian Business Structures Report

This report analyzes various Canadian business structures, including sole proprietorships, partnerships, corporations, and cooperatives. It begins with an introduction to these structures, outlining their key features and legal implications. The report delves into the advantages and disadvantages of each structure, providing a comprehensive comparison to aid in decision-making. It discusses the ease of setup, liability considerations, capital requirements, and operational flexibility of each business type. The report then presents a case study, applying the concepts to a specific scenario involving a group of friends starting a business, and recommends the most suitable business structure for their venture. Key legal and practical aspects related to establishing a corporation are also examined, including environmental sustainability, defining business objectives, and supply chain considerations. The report concludes by highlighting the importance of selecting the right business structure for achieving business goals and complying with Canadian business laws. The report also analyzes the role of the board of directors, shareholders, and the transfer of ownership within a corporation, and addresses potential conflicts of interest that may arise in corporate management. Finally, the report provides a detailed examination of the advantages and disadvantages of a cooperative, and the reasons why a corporation is the best fit for the given case study. The report is a valuable resource for students studying business law and business development, and provides a practical understanding of the different business structures available in Canada.

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note

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Table of Contents
Part 1................................................................................................................................................2
Introduction..................................................................................................................................2
Sole Proprietorship :....................................................................................................................3
Advantages of this business structure......................................................................................3
Disadvantages of this business structure.................................................................................3
Partnership:..................................................................................................................................4
Advantages of this form of business structure.........................................................................4
Disadvantages of this form of business structure....................................................................4
Corporation:.................................................................................................................................5
Advantages of this form of business structure.........................................................................6
Disadvantages of this form of business structure....................................................................6
Cooperative:.................................................................................................................................7
Advantages of this form of business structure.........................................................................7
Disadvantages of this form of business structure....................................................................7
Part 2................................................................................................................................................9
Part 3..............................................................................................................................................11
References......................................................................................................................................13

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Part 1
Introduction
In the Canadian Business Structure there are four types or categories of business which
can be used in order to create a business. The first business structure that can be set up as sole
proprietorship. This kind of business is considered to be informal and easy going where the
operator of the business and the business which is carried out is considered to be similar in the
legal point of view. It is considered to be one of the most common business structures as it can
be easily instituted. The second kind of business structure which can be set up would be the
partnership form of business which is considered to be similar to that of the sole proprietorship
but in case of partnership there has to be two or more members and in a partnership form of
business structure the partners are having a contractual bond. The third category of the Canadian
business structure includes Corporations which includes a company or an organization which has
its own separate legal identity. The fourth and the last category is that of the cooperative which
includes a group of people or individual who have similar interests and they come together
which helps them to share products and services (Tourism, 2017).

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Sole Proprietorship :
This is the type of business structure which has an informal setting and the business is
conducted by a single person because of its informal nature. It is a popular business structure
which is followed by several individuals as it is informal and easy to set up. The operator of the
business is considered to be similar to that of the business which that operator is conducting and
they are considered to be the same in law.
Advantages of this business structure
 It is considered to be cost effective.
 It is easy to set up.
 Minimal working capital is required.
 There are flexibility in terms of operation and there is a certain amount of freedom.
 This kind of business structure is considered to be simple and which is affordable by all.
Disadvantages of this business structure.
 The most significant disadvantage is that of unlimited liability since the sole
proprietorship does not enjoy any kind of legal separate entity the personal wealth is
connected to that of the business wealth.
 Since it is considered to be a small business structure and it has minimal funding in the
business it is considered to be difficult in order to raise funds and capitals for the business
since it is an individual’s business.
 In this kind of business there is difficulty in tracking the expenses of the proprietorship
the financial control is considered to be weak (Brigham & Payne, 2015).

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Partnership:
The partnership is the kind of business which is similar to that of the sole proprietorship
but the difference is that in this business structure the involvement of two or more people is
necessary which would mean that the two or more people form a contractual bond where they try
to open a company where they would be liable for the functioning of that company. Partnership
is not considered to be different from that of the owners of the business. There are mainly two
kinds of partnership business structure the first is considered to be the general partnerships where
the partners of that specific company share their responsibilities and take care of the management
of that company. They also remain liable personally as well as legally for the company’s debts or
losses. The second kind of partnership is considered to be the limited partnerships where the
management are supervised and overlooked by some partners and the other partners take care of
the financial needs of the company.
Advantages of this form of business structure
 This kind of business structure is considered to be affordable.
 The cost of the capital gets divided and therefore, it is easy to gather capital for the
business.
 There has been restricted limited regulation from the external factors.
 The business matters of the partners remain private.
 It is considered to be easy to change any kind of business structure if it is necessary.
Disadvantages of this form of business structure
 The partners are considered to be jointly and severally liable in this form of business
structure.

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 The partners are liable for the debts which have been faced in the company or the
organization by the members of that company.
 The partners in the company are liable for each other’s actions as they act as agent of the
other partners.
 If any of the partner considers to leave then it would be considered as a costly affair as
the liability to pay for the whole capital. would fall on one partner or the other partners
who decided to stay (Bennett, 2016).
Corporation:
A corporation is a separate legal entity which has its own personality. The corporation is
regulated by the directors and the directors are the person who takes care of the operations of a
corporation. The corporation is created or instituted with the help of the share holders or the
share owners who invest in the corporation or the company as they are responsible for the
success of the company. The board of directors are considered to be the ones who act in the
interests of the share holders or the share owners. There are no personal liability which is present
on the share holders or the share owners. There has been a more personal existence which is seen
for the corporation which is different from that of the sole proprietorship and the partnership
form of business structure. There are two kinds of Corporations which are present in Canada at
the provincial level. They are the Private corporations where the corporations are considered to
be formed by one or two different members but it needs to have a majority of the directors which
are present in Canada. There are the public corporations where the corporation is considered to
be listed, the company or the corporation is considered to be publicly listed, and the securities are
to be sold to the public at large.

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Advantages of this form of business structure
 The share holders or the share owners who are a part of the company is considered to be
liable as per the amount of shares they have invested and not beyond that which means
that the share holders of the corporation are considered to be liable on a limited basis.
 The source of capital is considered to be high since there are several people who are
considered to invest in the company or the corporation and the share holders have huge
amount of capital that can be invested in the company or the corporation.
 There has been various ownership transfers in a corporation which is considered to be an
advantage of that particular company or corporation.
 The company or the corporation has a perpetual life in the sense that the company is
considered to be continuous in nature. Even if there is any kind of absence of the share
holders in a company due to some reason the company or the corporation has will carry
on the functions of the company as it is continuous in nature.
Disadvantages of this form of business structure
 There can be a concept of double taxation which means that a corporation or a company
has to pay the income taxes and this means that the company has to pay taxes and along
with the corporation or the company the share holders of the company has to pay taxes
which would mean that their income is taxable which causes double taxation.
 There might be substantial amount of or excessive paperwork that the corporation has to
do therefore, this is considered to be a disadvantage.
 If there are various share owners who are involved independently and they carry out the
management of the corporation then there might arise conflicts of interests at some point
of time which would disrupt the functioning of the corporation (Drucker, 2017).

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Cooperative:
A cooperative is considered to be a corporation that is created or instituted by individuals
who have similar kind of interests which means that the they have a collective interest and due to
this interest they come together and try to form a cooperation and by that they try to collect and
share products or services.
Advantages of this form of business structure
 It is considered to look after or cater to the needs of the collective or the community at
large.
 It is affordable and is considered to be suitable for a community at large.
 It is not considered to be of high maintenance.
Disadvantages of this form of business structure
 The equity is less and due to this reason the people are not much interested in this kind of
cooperative organizations.
 There are a lot of restrictions or limitations which are imposed in the cooperatives which
makes it less reliable for the people to take part and create it.
 The people who are considered to be involved in cooperatives do not just pay or invest in
their own shares but also try to pay the maintenance fee which makes it less likeable and
less favorable for the people to be a part of it.
The form of business structure that would be suitable for the particular mentioned scenario
would be the corporations. The reason for such a choice would be because in this /particular
case or scenario that has been mentioned corporation form of business structure would be
favorable and since there are several people who are considered to be investing in this

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particular form of business therefore, this form of business is considered to be suitable
(Prause & Hoffmann, 2017).

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Part 2
Corporations are considered to be separate legal entities which have a distinct
personality. The legal personality is different as the corporations are considered to be artificial
persons and they enjoy such rights and duties which are related to that of separate person or a
distinct personality. In order to constitute a separate corporation the practical and the legal
aspects needs to be taken into consideration which means that there are certain legal issues which
needed to be taken into consideration.
Firstly, in order to create a corporation in Canada it needs to abide by all the regulations
and provisions which have been stated in the Canada Business Corporations Act. It needs to
create a contract with the members to make it binding on all the parties to work together. The
issues that needs to be identified in this form of business structure is considered to be that of the
environmental sustainability issue where the location of the corporation needs to be fixed along
with the compatibility of the environment which means that it would not be considered to harm
the environment.
Secondly, the issue that needs to be identified is considered to be the type of business that
it needs to run if the business or the organization is set up or created the objectives of the
business needs to be understood as well otherwise the organization would be working without
any kind of objective. Therefore, the purpose needs to be defined.
Thirdly the issue that needs to be discussed is considered to be the supply of the products
or the suppliers or the vendors with whom the business is going to be associated and who would
help in increasing the profit motives of the business. This is also considered to be an issue which
needs to be taken into considered as this is one of the legal aspect which needs to be looked after.

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Fourthly, the target audience or the consumers are the ones who are going to act as a
determining factor in the success of a business where the consumers are the ones who would
decide whether the business has been doing well or are incurring any kind of losses. Therefore,
the consumers need to be determined in this business which would help the business grow more.
Therefore, these are some of the issues or the aspects that needs to be taken into
consideration after identifying the form of business structure and trying to establish a business or
a corporation.

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Part 3
The legal agreements that would help or assist in resolving the issues under the Canadian
Business law would be.
Firstly, under the Canada Business Corporation Act the regulations or the provisions need
to be applied and this Act would be regulating the Corporation in Canada as the rules and
guidelines for the operations of a corporation are considered to be laid down under the Act which
would be a governing authority It also needs to have environmental compatibility which would
mean that the corporation which is being made should not hamper the environmental while
carrying out its functions and should not cause any kind of hazards or nuisance to the
environment and toward its employees. It should also try to ensure safety towards the workers
and the environment. It should under the act of Canadian Environmental Protection Act 1999 try
to ensure safety to the environment. It should under the Canada Labour Code be able to ensure
safety towards its workers.
Secondly, no corporations or companies work without any objective or purpose. Every
corporation has its certain aims or objectives with which they function and try to fulfill the
activities of a company or corporation.
Thirdly, the corporation under Consumer Protection Act, 2002 should be able to provide
protection towards its vendors and suppliers as well as the consumers about the various product s
and services which would help the corporation grow and remain transparent and accountable to
the people or the individuals who are associated with the particular corporation.
Therefore, in conclusion to set up a corporation there are various aspects that needs to be
taken into consideration and a lot of things needs to be under control ands supervised as

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corporation is considered to be a separate legal entity and the people who invest in the
corporation tries to find the best possible outcome from the corporations along with the people
who are associated with it.

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References
Bennett, R. J. (2016). Interpreting business partnerships in late Victorian Britain. The Economic
History Review, 69(4), 1199-1227.
Brigham, K. H., & Payne, G. T. (2015). Article commentary: The transitional nature of the
multifamily business. Entrepreneurship Theory and Practice, 39(6), 1339-1347.
Canada Business Corporations Act.
Canada Labour Code.
Canadian Environmental Protection Act 1999.
Consumer Protection Act, 2002.
Drucker, P. (2017). Concept of the Corporation. Routledge.
Prause, G., & Hoffmann, T. (2017). Cooperative Business Structures for Green Transport
Corridors. Baltic Journal of European Studies, 7(2), 3-27.
Tourism, S. B. (2017). Canada Small Business Financing Program: Guidelines-Canada Small
Business Financing Program.