Risk & Business Magazine Benson Kearley IFG Fall 2015 | Page 26

Business Structures

Owning and Managing a Small Business/Partnership
BY: MICHELLE COWELL, B.SC., EPC, CDFA, SENIOR INVESTMENT ADVISOR, HOLLISWEALTH INSURANCE AGENCY LTD.

A

major consideration when
establishing or managing a small
business is choosing which legal
structure to operate your business under.
There are basically three main choices;
Sole Proprietorship, Partnership, and
Incorporation. These are quite distinct
structures with particular advantages
and disadvantages depending on the
situation. Here is a brief overview:

Sole Proprietorship

This is by far the simplest legal
structure to adopt and is often chosen
by individuals who are just starting
out in business. Legally, and from a tax
perspective, the business is not separate
from the individual. A Sole Proprietor
does not file a separate tax return for the
business but rather includes any business
activities in their own regular return.
The pros and cons of this structure are:
Pros
Very simple to establish. Except where
the name of the company is different
from the owner/operator’s name, no
legal registration is generally required.
Easy to adjust the workings of the
operation with few legal constraints.
Simple to cease operations if required.
No need to share profits.
The ability to use business losses
against other personal income.
Cons
Limited ability to a