What are all the different business structures available in Ontario?
Ontario entrepreneurs can choose from several structures, each with different liability, tax, and governance characteristics.
A sole proprietorship is the default for a single owner — simple, inexpensive, no separate legal entity, unlimited personal liability. A general partnership arises when two or more people carry on business together; all general partners share unlimited personal liability. A limited partnership has at least one general partner (unlimited liability) and one or more limited partners who risk only their investment, provided they do not actively manage the business. A limited liability partnership (LLP) is available only to certain regulated professions such as lawyers and accountants, and limits inter-partner liability for the negligence of co-partners.
A corporation — whether incorporated provincially under the OBCA or federally under the CBCA — is a separate legal entity. Shareholders have limited liability. Corporations can be for-profit or not-for-profit. A not-for-profit corporation under the Ontario Not-for-Profit Corporations Act, 2010 or federally under the Canada Not-for-profit Corporations Act is used for clubs, charities, and community organizations.
There are also co-operative corporations under Ontario's Co-operative Corporations Act for member-owned businesses. Most commercial enterprises choose between a sole proprietorship, general partnership, or for-profit corporation.
Key takeaways
- Ontario offers sole proprietorships, partnerships (general, limited, LLP), corporations, and co-operatives.
- Liability protection varies: sole props and general partners face unlimited liability; corporations provide a shield.
- LLPs are limited to regulated professions in Ontario.
- Most businesses choose between sole prop, general partnership, or corporation depending on size and risk.