Online Business
Hello Blogosphere!
We are now on post 2 for this new blog. How exciting!
As reviewed in the previous post, our goal is to hopefully give back a little by providing a useful, accessible, and reliable source of information.
We are, of course, not providing legal advice here. But our goal is definitely to do a little more than just post photos of expensive food (not that I necessarily have a problem with expensive food) or summarize our services.
What we are really trying to do, and goodness knows it is going to take time, is provide some context and colour in to the practice of law. I previously wrote a blog that was organized around commenting on events of the day. This new blog will probably continue in that vein, but it is also going to tackle some questions that, as a lawyer, I get frequently asked.
Doing Business Online?
A major consequence of Covid has clearly been that just about every business in Ontario now needs to think seriously about how to continue to serve its customers without providing physical access.
Let's be honest: this transition is going to be hard. Doing business through the internet involves not just different tools, it also involves a change in economic relationships. Just look at the platform-based 'jobs'. It is hard out there, and that goes for business owners too.
At the same time, for people who feel comfortable with the internet but are less familiar with the 'world of business' there may be a different kind of learning curve.
While I do want to provide information and resources for both existing businesses that are looking to go digital and first time entrepreneurs who are familiarizing themselves with the business world, we always have to start somewhere. Let's start at the beginning. Let's start with first time entrepreneurs.
Starting a New Business -- Some Very Preliminary Considerations
If you’re thinking of starting a business, it is only natural to consider the proper legal structure to use for your new venture.
One question that often comes up is whether a new business needs to be run through a corporation. The following are some general observations to help you start think about the most relevant issues.
Sorry, There is No 'Magic Bullet'
A corporation is not always the right structure.
Let's just briefly review some alternative structures.
Sole Proprietorship
The single biggest advantage of a sole proprietorship is that it is very easy to setup and run. Due to the minimal amount of paperwork involved, sole proprietorships are by far the most popular structure among first time business people.
The key point is that a sole proprietorship is not a legal entity. It does not have a separate legal personality from its owner.
Please note, though, that you are supposed to register the sole proprietorship if you're doing business under a name other than your own name. You will also need to collect sales taxes once you start making sales. And, you will need to obtain the right licenses and permits depending on the nature of the business you are undertaking.
A sole proprietorship will not result in separation of your personal and business assets. Likewise, business taxes are paid on your annual individual income tax return, and you are personally responsible for the debts, actions and obligations of your business.
Partnership
If you are into business with others or looking to combine financial resources, a partnership might be the right option.
Like a sole proprietorship, there is no legal separation of personality between you and your business in the case of a partnership. Instead, the partners use different types of legal tools, which typically revolve around an explicit partnership agreement, to spell out their respective roles.
Cooperative
The least common business structure for our purposes, a cooperative is a business that is owned and controlled by an association of members. The members are typically a group of people or businesses who provide a good or service.
What about Corporations?
OK. So you have read through the above and thought to yourself, well that is all well and good but what I really want to know is about incorporation and whether a corporation is the right structure. Fear not, we are going to get in to that!
Corporations are fascinating, and I personally think they are incredibly important and interesting part of today's world. We are going to talk about the big picture as well as all sorts of nerdy details.
Until the next one - Peace!