There are three questions to answer when understanding how your business will be structured:
We’ll answer each in turn.
- What is my business classification?
- What is my business status?
- What is my business type?
What is my business classification?
- This question simply asks what business entity will you be operating under? In Canada there are 3 options: a sole proprietorship, a partnership or a corporation.
Tip: If you have yet to make this decision, it is best for you to consult with your lawyer and/or accountant regarding which option is the best for you.
However, here is some information summarized from the Government’s Canada Business Network website. You can find the complete table here: http://www.canadabusiness.ca/eng/page/2853/
What is my business status?
- Your business status refers to whether or not the business already exists. It can fall into multiple categories the most common of which are: a new business (ie start up), an expanding business (one that has been in operation for a year or more), a business that already exists and you are becoming an official partner or a business that already exists that you are buying outright.
What is my business type?
- Your business type is defined by the style of business you will be operating. There are four broad categories: manufacturing, service, retail, online. You will be expected to further refine this for tax assessment purposes but for the Business Plan, this is sufficient.
Note that an online business is one that operates solely online (not one that has an online presence in addition to operating in the “real world”)
- What structure have you decided on for your business? Answer the three questions above in your notes or write on your worksheet.