Welcome back to Part 2 of the Matthew "Match the Wine" Levine series on Northern Italian reds. If there’s one thing Match the Wine understands, it’s that when the occasion calls for something special, your wine should rise to the occasion. And for those bigger, more memorable moments, he recommends Nebbiolo.

Nebbiolo, the prized grape of Piedmont, is the backbone of the region’s most renowned wines—Barolo and Barbaresco. These wines are not just powerful; they’re age-worthy and complex, bursting with bold, dark red fruit, spice, licorice, and deep, earthy characteristics.

Match the Wine knows that Nebbiolo is the perfect companion for your most flavorful steaks. Whether you’re serving a tender filet, a hearty New York strip, or a robust Porterhouse, Nebbiolo’s depth and complexity will elevate your meal to extraordinary heights.

So, when you’re looking to savor a special moment,, seek out a Nebbiolo. It’s the wine that turns a great steak into an unforgettable experience. Stay tuned as we continue to explore the world of perfect pairings.

Welcome to Part 1 of the Matthew "Match the Wine" Levine series on Northern Italian reds. If there's one thing we've learned from Match the Wine, it's that red wine and red meat are a classic duo, and steak is the perfect partner.

For this installment, we're focusing on Barbera, a versatile red from the Piedmont region. Known for its bright acidity and juicy fruit flavors, Barbera often finds its way into simpler, everyday wines. But don't let that fool you—this wine still has plenty to offer when it comes to pairing.

Match the Wine suggests matching your Barbera with a nice hanger steak or tri-tip. The wine's acidity cuts through the richness of the meat, creating a balanced and satisfying experience. It’s a pairing that’s both approachable and full of flavor, perfect for your next meal.

Stay tuned as we continue exploring the world of Northern Italian reds and the steaks that complement them.

Matthew "Match the Wine" Levine isn't just a wine lover; he's a master of pairing.

His passion? Matching the perfect wine with the perfect dish. If there's one thing Match the Wine knows inside and out, it's Northern Italian reds. Think Barbera, Barolo, and yes, Barbaresco—these are the wines that make his heart (and palate) sing.

But here's the secret sauce: Red wine wants red meat, and red meat means steak. Whether you're grilling up a ribeye or savoring a tender filet, there's a Northern Italian red that’s just waiting to elevate your meal to new heights.

In the next two episodes, we’re diving deep into this match made in heaven. We’ll explore the best Northern Italian reds and how to pair them with your favorite cuts of steak. Whether you're a seasoned sommelier or just starting to explore the world of wine, we've got you covered.

Stay tuned—you won’t want to miss this.

Welcome to Match the Wine.

In this blog we explore the life and tastes of Matthew Levine. You might know Matthew by various names. To his colleagues and clients, he’s simply “Levine.” His friends, in a nod to his larger-than-life personality, call him "Moose." But in the wider world, he’s known as Matthew "Match the Wine" Levine, a man who appreciates the finer things in life—especially when it comes to wine.

Here, we’ll dive into the story of Match the Wine, our hero, a multifaceted human being who navigates life with a glass of wine in one hand and a tasting board of charcuterie perched near his neck. THis is a story that you definitely do not want to miss. 

Check it out!

Wanna discover more?

Looking for more quality information about Match the Wine?

You are in the right place at the right time. Our hero, a multifaceted human being who navigates life with a glass of  Chablis in one hand and an oyster amuse-bouche in the other, is the life of the party! Match the Wine enjoys a crisp Prosecco and savors reds with the right pedigree. This blog isn’t just about wine; it’s about the journey of a man who knows what he likes and isn’t afraid to explore new horizons.

So, whether you're a wine enthusiast or just curious about the man behind the name, stay tuned. There's much more to discover.

Hey guys! Today's post is going to answer questions about what a Certificate of Incorporation really represents.

I am a lawyer and have been doing this for more than ten years. I have had the privilege of working with a range of businesses including various corporations. 

Last year, when we first got locked down, I was of course a bit shocked. As time goes on, I started thinking about how I can give something back to our community. One idea was to create this blog as a source of credible, reliable information. In particular, I hope that this first set of blog posts is helpful for guys (and girls) who may be first-time entrepreneurs. 

This question -- i.e., what is a Certificate of Incorporation and what does it really represent-- comes up from time to time. In fact, there is some unnecessary confusion about what exactly the Certificate of Incorporation represents. Let me try to clear things up. 

It's all good, man. What You Will Learn Today

You already know that the corporation is a separate legal entity. That sounds simple enough at first, but when you stop to think about it you might have questions about how exactly this separate legal entity comes into existence. 

Metaphorically speaking: how does the corporation go from being a glimmer in someone's eye to being a legal entity with rights and responsibilities? 

In Canada, it makes sense to think of the corporation's birth as divided in to two steps. 

In the first step, an application is made to either the federal or provincial government. For example, in Ontario, a Form 1 is submitted to the Ministry of Government and Consumer Services. Provided that the contents of the Form 1 are not obviously out of order, the Ministry will issue a preliminary approval. 

In the second step, the corporation drafts its first shareholders' and directors' resolutions. These initial resolutions organize the corporation. They determine the corporation's key actors by electing directors, appointing officers, and issuing shares to shareholders.

We can switch metaphors and say that the first step represents the fertilization of the corporate egg while it is only with the second step that the corporation is fully born.

In practice, Step 1 and Step 2 are connected. In fact, there is an unspoken assumption that the performance of Step 2 will immediately follow the performance of Step 1.  

What Does this Have to do With the Certificate of Incorporation?

The two steps of incorporation provide a context for understanding the Certificate of Incorporation. 

Let's go through this in terms of first Ontario incorporation and then federal incorporation 

Ontario Incorporation: Certificate of Incorporation  

A Toronto-based business that chooses to incorporate provincially will need to liaise with Service Ontario. 

The incorporator will complete the government's Form 1 in duplicate with original signatures on both copies.  (Form 1 is issued by the Minister of Government and Consumer Services pursuant to the Regulations to the Business Corporations Act.)

The incorporator will also obtain and provide to the government an Ontario-biased NUANS name search report. 

Unless this documentation is not in order, the government will then issue the corporation's Articles of Incorporation. The Articles of Incorporation include the company's Certificate of Incorporation. As such, the Certificate of Incorporation indicates that the application for incorporation has been approved by the provincial government.  

The Certificate of Incorporation issued to an Ontario corporation will indicate its date, the corporation's Ontario corporate number (OCN), and the corporation's complete name. 

Federal Incorporation: Certificate of Incorporation  

A business that chooses to incorporate federally will receive this documentation from Corporations Canada, which is a division of Innovation, Science and Economic Development (formerly known as Industry Canada.) 

After filing the necessary application and NUANS report and assuming that nothing is amiss, the business will receive its Articles of Incorporation (i.e., the "Federal Articles of Incorporation".)

Federal Articles of Incorporation will include:

• Corporate Information Sheet,
• Certificate of Incorporation,
• Form 1,
• Form 2.

The Federal Certificate of Incorporation will include the date of incorporation, a uniquely assigned corporation number, and the full name of the corporation.

Bottom line

Questions about the Certificate of Incorporation come up from time to time. In fact, there is some unnecessary confusion about what exactly the Certificate of Incorporation represents. In this post, I have outlined how the Certificate of Incorporate represents the crystallization of the first step in a two step process.

After the incorporator obtains the Certificate of Incorporation, there is still a need to carry out the second step. Otherwise the business is not properly incorporated. 

Hey guys! Today's post will cover some more details you might want to consider before selecting a corporate name.

I am a lawyer and have been doing this for more than ten years. I have had the privilege of working with various corporate actors, and that includes incorporators and founders.

Last year, when we first got locked down, I was of course a bit shocked. As time goes on, I started thinking about how I can give something back to our community. One idea was to create this blog as a source of credible, reliable information. In particular, I hope that this first set of blog posts is helpful for guys (and girls) who may be first-time entrepreneurs.

A few weeks ago, my post introduced the two most important things you absolutely must know about corporate names. Today's post is going to go into more detail. By the end, you will be ready to pull the trigger.

It's all good, man. Let's do this.

Looking for More Details about Corporate Names?

Incorporation is a powerful legal structure. As an entrepreneur in Toronto, you have the choice between federal and provincial incorporation.

In either case, the corporation can be either named or numbered. A corporate name has three essential elements. In today's post, we are going to go into more detail about these three elements, which are

• distinctive element
• descriptive element
• legal element

Does Your Corporate Name Have a Distinctive Element?

A corporate name must have a distinctive element.

The distinctive element identifies the business through a distinctive word or set of words. There is going to be a spectrum between the highly distinctive and the less distinctive. A coined or made-up word is likely to be highly distinctive. A person or place name is likely to be less distinctive. 

Let's consider a hypothetical named company called Yellowbird Consulting Corp. 

The word 'Yellowbird' is the distinctive element in this corporate name. Yellowbird is not at the extreme end of the highly distinctive continuum. It could be made more distinctive by using synonyms, such as 'Goldenbirds'; but, then again, it is more distinctive than simply 'Yellow.' 

For a few more thoughts on this balancing act, see 'Your Corporate Name Must Be Unique' below.

Sufficient distinctiveness is one consideration. At the same time, the word or set of words used for your distinctive element is going to be an important part of the brand that the corporation builds around its business. 

Does Your Corporate Name Have a  Descriptive Element?

A corporate name also should have a descriptive element. 

The descriptive element indicates the main activities or type of business in which the corporation is engaged.

Let's go back to the example of Yellowbird Consulting Corp. 'Consulting' is going to be the descriptive element in this corporate name. The incorporator could just as well use words such as 'Advising' or 'Counselling'.

Does Your Corporate Name Have a  Legal Element

Finally, a corporate name must have a legal element. This is also referred to as a corporate suffix. 

Because corporate names can be in either French or English, there are two sets of corporate suffixes that are available. The first set is English, i.e.,  Limited, Ltd., Incorporated, Inc., Corporation, Corp. The second set is French: Limitée, Ltée, Incorporée, Inc., Corporation, Corp.

The incorporator therefore has a total of 12 legal identifiers to choose from. But, once a specific suffix is registered with the corporate name, the expectation is that only that suffix gets used.

So, for example, 'Corp.' is the corporate suffix in Yellowbird Consulting Corp. It would be incorrect to refer to this corporation as Yellowbird Consulting Incorporated or Yellowbird Consulting Corporation. 

Your Corporate Name Must Be Unique

Now that you have put together the three required elements, you are going to want to check that your name is unique.

You do this by obtaining a name search report, which is often referred to as a NUANS report. NUANS refers to a specific, commercial database of corporate names. 

The report consists of the results of a search where your proposed name is put into the database, and the most similar existing, registered names are displayed.

Let's look at this in terms of the hypothetical of 'Yellowbird Consulting Corp.'

It may well be that there are already registered corporations in Ontario that have the distinctive element 'Yellowbird', e.g., "Yellowbird Dynamics Incorporated". In that case, generally speaking, Yellowbird Consulting Corp. and Yellowbird Dynamics Incorporated are sufficiently different that Yellowbird Consulting Corp. would still be considered unique.

If, however, the name search report indicates that there is already a registered corporation with the name "Yellowbird Consulting Corporation", well then you are out of luck. Why? Because Yellowbird Consulting Corp. and Yellowbird Consulting Corporation are sufficiently similar that Yellowbird Consulting Corp. would not be considered unique. 

The Takeaway

There are other rules against obscene names. Also, this being Canada, there is a rule stipulating that a corporate name must not imply a connection to the royal family.  

The basic principle is that a corporate name has three parts and that it must be distinct.  

That is all, Folks

Thanks for reading today's post. I hope it helped you feel more confident about the details of selecting a corporate name.

Hey guys! Today's post is going to introduce two things you absolutely need to know before selecting a corporate name.

I am a lawyer and have been doing this for more than ten years. I have had the privilege of working with various corporate actors, and that definitely includes incorporators and founders. 

Last year, when we first got locked down, I was of course a bit shocked. As time goes on, I started thinking about how I can give something back to our community. One idea was to create this blog as a source of credible, reliable information. In particular, I hope that this first set of blog posts is helpful for guys (and girls) who may be first-time entrepreneurs. 

We have been working to churn out these posts for a few months and I am glad that some people are finding the blog useful. A few posts have talked about corporate names. So, I wanted to just introduce a couple basic but important points today. 

If you are looking at naming a corporation and are feeling a bit lost, well then you have come to the right place 

Its all good, man. Let's do this. 

What You Really Need to Know about Corporate Names

Incorporation is a powerful legal structure. It has both legal advantages -- think limited liability -- and potential business advantages, such as the opportunity to build an enduring brand. We have written a whole post about the leading theories for why a corporation is granted a separate identity as a legal person. 

The bottom line is that a corporation is a separate person and it therefore has to have its own specific name. As a first-time entrepreneur, you might have questions about this, you might be wondering whether there are things you have to do or have to avoid in selecting a name. We are going to get into that here. 

Specifically, in this first post on the topic I am going to keep things simple. That means we will be passing along the two things that you absolutely have to understand about corporate names.

1. A corporation can be either named or numbered
2. A corporate name has three essential elements. 

Point 1: Numbered or Named

The federal and provincial governments share jurisdiction over business corporations. To make a long story short, the result is that an entrepreneur in Toronto gets two choices. You may choose

• to incorporate federally under the Canada Business Corporations Act (CBCA); or
• to incorporate provincially under by the Ontario Business Corporations Act (OBCA).

We have compared the key considerations elsewhere, but in either case the corporation must identify itself via either a number or a name.

You may have heard the term numbered company, this simply refers to a corporation that has decided to not use a corporate name.  If you incorporate a numbered company, the registry will assign a number followed by the appropriate legal designation.

If you choose to incorporate as a numbered company, and later want to use a corporate name, that is definitely possible. 

The only alternative to a numbered company is a named company. Furthermore, if you choose to incorporate a named company, the corporate name must be distinct have three essential elements. This brings us to point 2.

Point 2: A Corporate Name has Three Essential Elements

A named company has a corporate name that has been chosen by the incorporator, for example Yellowbird Consulting Corp.

When choosing a corporate name you need to satisfy the requirement for three specific elements 

• a distinctive part, e.g., 'Yellowbird'
• a descriptive part, e.g., 'Consulting' and
• a corporate suffix, e.g., 'Corp.'

Let's just briefly, explain the above. Yellowbird is the distinctive element that promotes the corporation's brand. Consulting is the descriptive element describing the nature of the business. And, Corp. is the corporate suffix.  

Looking for More Details?

Today's post was aimed at sharing the most important points about a frequently asked question.

I'm going to be putting together a more detailed post and will post a link here.

Also, if you are looking for more details about the whole process of incorporating, we have put together a Guide that you can use. It's free and is coming soon. Keep an eye open for that

That is all, Folks

Thanks for reading today's post. I hope it helped you feel more confident about the basics of choosing a corporate name.

Hey Guys! Today’s post is gonna compare provincial incorporation versus federal incorporation for entrepreneurs in the GTA.

I am a lawyer and have been doing this for more than ten years. I have had the privilege of working with entrepreneurs in a wide variety of industries. (It is actually one of the best parts of this job.) 

Last year, when we first got locked down, I was of course a bit shocked. As time goes on, I started thinking about how I can give something back. One idea was to create this blog as a source of credible, reliable information. In particular, I am hoping that this first set of blog posts are helpful for guys (and girls) who may be first-time entrepreneurs. 

It’s all good, man. Let’s do this!

Provincial Incorporation Versus Federal Incorporation 

In Canada, our federal and provincial governments have concurrent jurisdiction over business corporations. To make a long story short, the result is that entrepreneurs in Toronto are free to choose between incorporating federally or provincially.

A federal corporation will be governed by the Canada Business Corporations Act (CBCA). Meanwhile, a provincial corporation in Ontario will be governed by the Ontario Business Corporations Act (OBCA). 

These two pieces of legislation are, to be frank, very similar. (In fact, the OBCA was modeled after the CBCA in order to promote corporate law coherence.) As a result, the differences between provincial and federal incorporation are relatively minor.

Today’s post is going to break down some of key considerations, especially: 

• Geography of operations, 
• Location of shareholders and directors
• name availability, and 
• Administrative cost and timing

Consideration 1: Where is the Business going to Operate

To get started, it makes sense to consider whether the business is going to operate only in Ontario, or in a wider swath of our vast country. 

A corporation established under the federal  Canada Business Corporations Act is automatically entitled to operate in all ten Canadian provinces. But, a corporation established under a provincial corporate law statute, such as Ontario' s Ontario Business Corporations Act, does not automatically enjoy this privilege.

As a result, an Ontario corporation will need to register in any other province in which it intends to operate.

Likewise, a non-Ontario provincial corporation should file certain additional paperwork before operating in Ontario. Specifically, we have the Extra-provincial Corporations Act in Ontario. It requires that a licence is required to do business in Ontario if a corporation was incorporated elsewhere. These are given out as a matter of course. 

A federal corporation may establish its business operations and market itself across Canada. For this reason, some business people prefer federal incorporation when they intend to establish a physical presence across Canada.
 

Consideration 2: Where are the Shareholders (and Directors) Going to be Located?

The founding shareholders will also want to think about where the corporation's shareholders will be physically located.

One reason is that both statutes require annual shareholder meetings as well as annual directors meetings.

There is an important difference between the two Acts, however, that we can examine by way of shareholders meetings.

You will want to think about whether it is going to be feasible for, for instance, the shareholders to be "present" in a single location for the annual shareholders meeting. Even if gathering for an in-person meeting is not practical, the corporation still has an obligation to hold an annual shareholders' meeting. In this respect, questions arise such as can the shareholders meeting be held online?

Ontario Corporations are generally thought to be able to hold an online shareholders meeting so long as the communication mechanism being used provides a means for the shareholders to vote. This is a general statement and will depend on a variety of specific factors.

However, under the CBCA the requirements for holding online meetings are more restrictive. Under the CBCA, an online shareholder meeting can only be held if the corporation's bylaws expressly permit it and the relevant communication mechanism used permits all participants to communicate adequately with each other during the meeting.

Without going into extraneous hypotheticals, the simple take-away is that incorporation under the federal statute may make virtual shareholders meetings more difficult. 

Consideration 3: Name Availability and Protection

The corporate name may be one of the reasons why an entrepreneur wants to incorporate in the first place. First, doing business as a corporation carries a certain amount of prestige. Second, the corporate name is protected in the jurisdiction in which it is registered.  

Provincial incorporation means that the corporate name is protected only within that province. Federal incorporation results in wider name protection. Once the corporate name is approved by Industry Canada, it is protected throughout Canada and all of its provinces and territories.

The flip side of greater name protection for federal corporations, is that the federal government imposes a stricter and more time consuming process for name selection. In order to incorporate a named corporation under the federal statutue, the incorporator must purchase something called a 'NUANS report'. This is a proprietary search on a database that is maintained of registered corporate names throughout Canada. 

Not only does the founder of a federal corporation need to obtain the NUANS report, the report has to be inspected and approved by Industry Canada. (Talk about government red tape!) 

In Ontario, the process is slightly lighter on bureaucracy. The onus is placed on the incorporator to ascertain that the corporate name complies with the statutory requirements and is distinct. 

 On balance, this consideration usually leans towards choosing to incorporate provincially. 

Consideration 4: Administrative Cost and Timing

So far, we have covered one consideration where federal incorporation has a clear advantage and two other considerations where the comparison is usually favorable to provincial incorporation. Let's look at a fourth consideration: what is going to take to get incorporated in terms of both time and cost.

The previous section talked about the federal government's bureaucracy heavy approach to corporate names. This is one of the factors that results in federal incorporation often being more time consuming.

While provincial incorporation is usually going to be faster than federal incorporation,, federal incorporation is going to have a smaller financial cost. Incorporating a business with Industry Canada under the Canadian Business Corporations Act costs $200 when done online. The alternative is going to Service Ontario's online portal and paying $350. 

Federal vs Provincial Incorporation: The Winner?

Guys, as you can see, there is no knock-out winner in this battle.

Federal incorporation and provincial incorporation are both very similar when it comes to the laws that regulate them. However, if your corporation intends on operating its business across Canada then federal incorporation gets the nod because of its automatic entitlement to operate in all ten provinces and three territories. 

Overall, it is good to keep things simple unless you have specific reasons for incorporating federally then the standard practice would be setting up an Ontario corporation under the provincial act.

In any case, there are variety of factors to consider and it is best practice to discuss any specific issues with a lawyer. 

Hey Guys! Today’s post is gonna contrast incorporation versus business partnerships in Ontario.

I am a lawyer and have been doing this for more than ten years. I have had the privilege of working with entrepreneurs in a wide variety of industries. (It is actually one of the best parts of this job.) 

Last year, when we first got locked down, I was of course a bit shocked. As time goes on, I started thinking about how I can give something back to our community. One idea was to create this blog as a source of credible, reliable information. In particular, I am hoping that this first set of blog posts are helpful for guys (and girls) who may be first-time entrepreneurs. 

It’s all good, man. Let’s do this!

Incorporation Versus Business Partnership 

There is a joke that lawyers love to say 'it depends.' While it's not especially funny (am I missing something?), it is true. The best vehicle for taking your business to the next level will depend on your circumstances and the facts of your business.  

Incorporation is a powerful legal structure that works well for many entrepreneurs. It has both legal and business advantages. If your business can afford the associated costs (in terms of both time and money), then yes, by all means, go ahead and incorporate.

Let's dive in a little deeper. 

Suppose there is more than one owner of the business. In that case, the natural alternative to incorporation is going to be a business partnership.  

What is a business partnership?

The word partnership gets used in various contexts within the law. For instance, of course, there is the notion of a domestic partnership. In fact, the world of business affairs is the original context for the law's use of the term partnership. 

A business partnership can be understood simply as two or more people carrying on business in common with a view to profit.  This means that ownership and, unless specified otherwise, management of the business is shared between two or more persons. 

Section 2 of the Ontario Partnerships Act, puts the matter in more technical terms:

"Partnership is the relation that subsists between persons carrying on a business in common with a view to profit, but the relation between the members of a company or association that is incorporated by or under the authority of any special or general Act in force in Ontario or elsewhere, or registered as a corporation under any such Act, is not a partnership within the meaning of this Act." 

In fact, three types of business partnerships are possible in Canada. They are a general partnership, a limited partnership, and a limited liability partnership. 

The general partnership is the most common type. For that reason, today's post is only going to consider the general partnership.  

In the following, I am going to compare three features of the corporation and a business partnership 

• Limited Liability
• Flexibility
• Tax treatment

Ill also briefly address a bonus, fourth point of comparison. 

As the big homie Freddy Mercury liked to say: “The Show Must Go On.” …. Let’s do this. 

Feature 1: Limited Liability

At law, a corporation is a separate entity from its owners. 

The corporation's separate legal identity results in limited liability for its owners. A corporate shareholder has limited liability because his financial liability is limited to whatever amount he has invested in the corporation's share capital.  Put more simply, the most the shareholder can lose is whatever he (or she) has put into the corporation. Even if the corporation goes into debt and is ultimately unable to pay back its creditors, those creditors will not be able to go after the shareholder's personal assets.

In contrast, a business partnership does not enjoy legal personhood. It is therefore not separate, at law, from its owners.  The result is unlimited liability, which is the most severe disadvantage of doing business as a partnership.

The owners of a business partnership are personally liable for the business' obligations.  This means that if  the partnership incurs debt, each owner will be personally liable to re-pay all of the debts. As a result, the business' creditors can and will go after the partners’ personal assets. (An exception is the Limited Partnership. We will discuss the Limited Partnership in another post, but it is generally not relevant to first-time entrepreneurs.)

This difference between limited liability and personal liability is the first point of comparison between a corporation and a business partnership.

Feature 2: Tax

A corporation is a separate and distinct legal person. As a result, a corporation must file its own annual corporate income tax return. The Canada Revenue Agency (“CRA”) refers to this as a T2. 

To file a T2 with the CRA, a corporation’s accountant will need to prepare thoroughgoing financial statements. Also, there are administrative requirements directly related to the preparation of the T2, such as maintaining a corporate minute book in case the CRA decides that an inspection is needed. Therefore, a corporation is not going to provide its owner with tax simplicity. 

But, the corporation does provide the opportunity for tax savings. The possibility of tax savings that can be achieved through incorporation will primarily take two forms:

• small business deduction  

• lifetime capital gains exemption

The small business deduction will apply to the first $500,000 of corporate income each year. It results in effectively lowering the corporation’s tax rate to about 12.5% in Ontario. The lifetime capital gains exemption kicks when you sell shares of your business. In that case, you may be able to personally take slightly less than $900,000 out of the corporation tax free. (There are  going to be eligibility criteria to understand about both of these programs.)

The key point is simply that these mechanisms for achieving tax savings are available to corporations.

In contrast, a business partnership is not a legally separate entity from its owner. This is going to result in greater tax simplicity but less scope for tax savings. 

In short, the business partnership will not file its own tax return with the CRA. Instead, the partnership's profit will go directly to the partners as income. The partners, i.e., the business’ owners, will then include that income on their personal tax return with the CRA, i.e. on his T1.  The income is then taxed, all other things being equal, at the higher rate for high-income individuals. 

Therefore, tax-treatment is another significant difference between a corporation and a business partnership.  

Feature 3: Flexibility

Incorporation creates a structure that is both flexible and potentially dynamic. Let’s look at a few ways in which this flexibility manifests. 

As I’ve written elsewhere, the corporation has multiple actors with distinct responsibilities. Shareholders collectively own the business, but they do not directly make strategic business decisions. Instead, shareholders must elect at least one director - or a board of directors - who make these decisions and monitor their execution. In turn, the board appoints senior management, i.e., “officers”, who run the day-to-day business.  

A major consequence of these differentiated roles is that a corporation can issue shares, even when the investors are strangers. The added layers of accountability built into a corporation make the corporation the preferred business structure of most investors. In turn, the prospect of diffusing ownership makes the corporation especially attractive for entrepreneurs who intend to raise equity financing.

The partnership, however, is a different story. A typical scenario is that each partner might bring a complementary skill set . For instance, one partner might focus on customer acquisition while the other handles the product’s technical details. Another common albeit more sophisticated permutation of the partnership is that one partner brings financial horse-power while other partners bring technical expertise -- this is the basic model of a hedge fund! 

Whatever the division of roles in a partnership, it will result in an organization that is ‘flatter’  than a corporation. It is also historically thought to be more difficult for a partnership to raise external investment. Whether you go with a partnership or corporation will in part depend on whether you embrace a professional approach to management. Even if you stick with a partnership, it is recommended to plan ahead through a partnership agreement.

Feature 4 -- Bonus: Less Up Front Cost

So far, we have covered two features where the comparison is almost always favorable to the corporation and a third where the corporation usually comes out ahead. Let’s also consider a factor that, on balance, points towards the business partnership as a desirable structure for new businesses. 

Simply put, there will be less up-front cost and less need for outside service providers if you choose to do business through a partnership. 

In my experience, this San Francisco-based lawyer puts the matter very clearly: 

It is noteworthy that while the advantage of the limited liability entities are clear both in terms of limited risk and tax planning, most businesses in the United States are either sole proprietorships or partnerships. The reasons for this are usually based on the way most businesses get started. Quite often family members simply combine in a business thus forming a defacto oral partnership and especially at the commencement of business, taxes are not critical (since little money is made) and limited liability not a major concern since there often are few assets owned by the original owners to protect.  …. 

Nevertheless, besides the up-front cost savings associated with a partnership, there are also convenience advantages associated with the partnership. In short, a partnership will be less regulated than a corporation. 

Bottom Line

Overall, the winner is the corporation. Incorporation can be a powerful vehicle for taking your business to the next level. But, there are certain circumstances where a partnership might be most appropriate.  

Hey Guys! Today’s post compares incorporation vs sole proprietorship in Ontario.

I am a lawyer and have been doing this for more than ten years. I have had the privilege of working with entrepreneurs in a wide variety of industries. (It is one of the best parts of this job.)

Last year, when we first got locked down, I was, of course, a bit shocked. As time goes on, I started thinking about how I can give something back to our community. One idea was to create this blog as a source of credible, reliable information. In particular, I hope that this first set of blog posts is helpful for guys (and girls) who may be first-time entrepreneurs.

It’s all good, man. Let’s do this!

Overview: Incorporation versus Sole Proprietorship 

There is a joke that lawyers love to say 'it depends'. While it's not especially funny (am I missing something?), it is true. The best vehicle for taking your business to the next level will depend on your circumstances and the facts of your business.  

Incorporation is a powerful legal structure that works well for many entrepreneurs. It has both legal and business advantages.  

BUT, starting and maintaining a Canadian corporation may be outside of your budget when first starting up. Just because the corporation is a good option in many cases does not mean that it is the best option in all cases. 

Let's dive in a little deeper. The most obvious alternative to incorporation is simply using a sole proprietorship. In the following, I am going to compare three features of the corporation versus the sole proprietorship

• Limited Liability
• Tax treatment
• Branding

As the big homie Freddy Mercury liked to say: “The Show Must Go On.” …. Let’s dive into some details. 

Feature 1: Limited Liability

At law, a corporation is a separate entity from its owners.

The corporation's separate legal identity results in limited liability for its owners. A corporate shareholder has limited liability because his financial liability is limited to whatever amount he has invested in the corporation's share capital. Put more simply, the most the shareholder can lose is whatever he (or she) has put into the corporation. Even if the corporation goes into debt and is ultimately unable to pay back its creditors, those creditors will not go after the shareholder's personal assets.

In contrast, a sole proprietorship is not a legally separate entity from its owner. The owner of a sole proprietorship is personally liable for the business's obligations. If your business incurs debt, you are personally liable to re-pay those debts. As a result, the business' creditors can and will go after the sole proprietor's personal assets. 

This difference between limited liability and personal liability is the first point of comparison between a corporation and a sole proprietorship. 

Feature 2: Tax Treatment

A corporation is a separate and distinct legal person. As a result, a corporation must file its own annual corporate income tax return. The Canada Revenue Agency ("CRA") refers to this as a T2.

To file a T2 with the CRA, a corporation's accountant will need to prepare thoroughgoing financial statements. Also, there are administrative requirements directly related to the preparation of the T2, such as maintaining corporate books in case the CRA decides that an inspection is needed. Therefore, a corporation is not going to provide its owner with tax simplicity.

But, the corporation does provide the opportunity for tax savings. The possibility of tax savings is going to be especially relevant if the corporation is profitable or at the very least has significant cash flow. For example, a corporation with several hundred thousand dollars of income will pay a much lower tax rate than a person with equivalent income would pay.

In contrast, a sole proprietorship is not a legally separate entity from its owner. This is going to result in greater tax simplicity but less scope for tax savings.

In short, the sole proprietorship will not file its own tax return with the CRA. Instead, the sole proprietorship's profit will go directly to the proprietor as income. The individual entrepreneur will then include that income on his tax return with the CRA, i.e., on his T1. The income is then taxed, all other things being equal, at the higher rate for high-income individuals.

Therefore, tax-treatment is another significant difference between a corporation and a sole proprietorship.

Feature 3: Branding

Sometimes the perceived prestige of a corporation is attractive, especially if your business relies on its brand. Here are a couple, specific legal considerations related to branding.

Naming. One of the first documents that is created when you incorporate is a name search. The details of the name search will differ slightly depending on whether you incorporate federally or provincially. The key point is this: once you incorporate, your corporate name goes into a database. In this respect, your business name is protected. 

When you register a sole proprietorship, you are registering the name you use to do business. The government does not, however, guarantee that you have exclusive use of the name. Furthermore, there are certain kinds of business names that can not be registered under a sole proprietorship. For instance, a sole proprietorship can not register John Smith Painting Co. because “Co.” indicates that the business is a corporation. 

Perpetual existence. Furthermore, because a corporation is a distinct legal entity, it enjoys perpetual existence. The result is that if something unfortunate happens to the founding shareholder, the corporation will continue to exist. On the other hand, a sole proprietorship will cease to exist upon the death of its proprietor. As a result, a sole proprietorship lacks permanence and may be less suitable for building a long-term brand.

And The Winner is ...?

I get asked about alternatives to incorporation fairly regularly. The above compared three specific features of the corporation against the sole proprietorship. There are, however, other features that a responsible entrepreneur will want to consider in comparing these two solutions for doing business in Ontario.

As already noted in this post and elsewhere on the blog, the corporation is a powerful legal structure. Suppose you are serious about running a successful business. In that case, you are going to gradually ‘transform’ from an entrepreneur into an executive. It is highly likely that you and your business will make use of the corporate form along this path.

Starting your own business is already a big step. Incorporation is that much more serious. If you want to know more about starting and maintaining a corporation, you are not alone. It turns out that a lot of guys are wondering about this topic.

Some of these guys have been writing to ask for more information. I am here to be a resource. I’ve put together a guide. The guide is more than 40 pages long -- yeah, its probably too long -- and it is 100% free.

In any case, the best vehicle for taking your business to the next level is going to depend on your own personal circumstances and the facts of your business. There are certain circumstances where a sole proprietorship might be most appropriate. For example, a sole proprietorship might be the best fit for an entrepreneur who is the sole owner of their business and has less than one hundred thousand dollars of annual business income.

Bottom Line

It really does depend on your personal circumstances and the facts of your business: the best vehicle for taking your business to the next level is going to depend on your own personal circumstances and the facts of your business.  

Incorporation entails extra work and extra costs. If your business is just getting started, then the sole proprietorship might be good enough. As your business grows, you can always incorporate.