This is the first article in a series on New business in Canada.We will present some of the most relevant aspects that need to be addressed when considering starting a business in Canada. Today we will bring some interesting information related to new small and medium-sized enterprises (SMEs), how immigrants have contributed and a brief summary about the most common business structure options..
The decision-making
As if the immigration process and all the changes that newcomers may face during their first years in Canada were not challenging enough, some of them go further and decide to also start a new business in this country. However, there is nothing new to the Canadian authorities: according to official information provided by Canada of Government, 33% of all business with paid staff are owned by immigrants - they are in the construction area, professional services, retail trade and others.
How long does the average new business last?
The concerns and challenges that involves a new business are quite similar everywhere: costs, market share, hiring process, raising funds to start and keep the business growing, living with an income that is difficult to predict, etc..
What does the statistics say? According to Government of Canada, around 68% of the new small and medium-sized enterprises survive for at least five years of operations and after ten years of operation this number decrease to near 45%, which is still is a good percentage if compared to Brazil, for example, where only 40% survive after their first five years.
What business structure would you choose?
Once the decision is made, it is now time to think about the business structure. Given that a significant part of the new business will be small and medium-sized enterprises, the first two of the three main options will likely be more appropriate:
Sole proprietorship
Very simple structure and typically used when the business is owned and operated by an individual that is responsible for the business and for its liabilities. Main important factor: the liabilities of the business are also the liabilities of the individual.
Partnership
When two or more persons carry-on business together – liability is usually split amongst the owners based on the terms.
Corporation
A legal entity distinct from its shareholders. Shareholders, with some rare exceptions, are not personally responsible for its liabilities.
In our next article we will get into taxation and some of the legal aspects that involves each option of business structure and how they can impact in terms of cash.
IBGE - The Brazilian Institute of Geography and Statistics
Magazine Forbes
(NEVES, Stanley. Starting a business in Canada)
