Organizing Your Business STAGE 7

ORGANIZING YOUR BUSINESS Sales Revenue (thousands of dollars) Expenses (thousands of dollars) Fixed Expenses Loss Area Breakeven Point Total Costs Sales Profit Area

ORGANIZE YOUR BUSINESS Select the organizational structure for your business Sole Proprietorship PartnershipCorporation Select and register a business name Select and register a partnership name Select a corporate name Draw up a partnership agreement Draw up articles of incorporation File for incorporation with provincial or federal government Comply with provincial licensing requirements Comply with municipal licensing requirements Deal with mandatory deductions Consider employment standards

SOLE PROPRIETORSHIP VS. GENERAL PARTNERSHIP

Advantages  Simple and inexpensive to start  Individual control over operations  All profit to the owner  Losses deductible from any other income Disadvantages  Unlimited liability  More difficult to obtain financing  Limited resources and opportunity FORMS OF BUSINESS ORGANIZATION SOLE PROPRIETORSHIP

Advantages  Pooling of financial resources and talents  Simplicity and ease of organization  Increased ability to obtain capital  Potential for growth Disadvantages  Unlimited liability  Divided authority FORMS OF BUSINESS ORGANIZATION PARTNERSHIP PARTNERSHIP

Advantages  Limited liability for limited partners Disadvantages  Centralized management  Difficulty in changing ownership FORMS OF BUSINESS ORGANIZATION LIMITED PARTNERSHIP

ACOA Entrepreneurs COWS Ice cream Making of the world’s best ice cream COWS Ice cream Making of the world’s best ice cream

Advantages  Limited liability  Continuity of the business  Easier to raise capital  Potential employee benefits  Tax advantages Disadvantages  Cost  Legal formalities  Inability to flow losses through to the shareholders  Need for personal guarantees FORMS OF BUSINESS ORGANIZATION CORPORATION CORPORATION

Licenses and Legal Requirements STARTING A HOME BASED BUSINESS

 Licences and Permits  Municipal  Provincial  Land Use and Zoning  Mandatory Deductions  Income Tax  Employment Insurance  Canada Pension Plan  Taxes  Provincial Sales Tax  GST/HST  Employment Standards Employment Standards  Work Safe NB Work Safe NB OTHER LEGAL REQUIREMENTS

OTHER LEGAL REQUIREMENTS INSURANCE General Liability Insurance Business Premises Insurance Vehicle Insurance Business Interruption or Loss-of-Income Insurance Disability or Accident and Sickness Insurance Key Person Insurance Credit Insurance Surety and Fidelity Bonds Partnership Insurance Workers’ Compensation