Setting up a business in Quebec is a complex process that requires several important steps to be taken into account. Among these steps, choosing the legal structure of your business is crucial, as each legal structure has its own particularities and tax implications.
The term "company" is often used to designate an incorporated business, but there are other types of company that are not necessarily corporations.
The Quebec corporation, also known as a "company", is a legal business structure with specific characteristics and rights.
To operate in Quebec, a business corporation must be incorporated. It must register with the Québec Enterprise Register and make an initial declaration as a legal person.
A joint-stock company is distinguished by :
In this context, the shareholders of a corporation do not own the company as such, but rather the shares they hold in it. They may receive a portion of the company's profits in the form of dividends, paid either in shares or in cash.
In addition, shareholders benefit from limited tax and personal liability.
Shareholders are also responsible for electing a Board of Directors to manage the company.
A general partnership (S.E.N.C.) is formed by a group of people who join together to run a business in a collaborative manner. This means that partners pool their assets, knowledge and activities, and share profits and losses.
Although an S.E.N.C. has its own name and the right to sue and be sued, it is not considered a separate legal entity.
This legal form is often chosen by start-ups because it is less costly than a corporation. However, the partners of an S.E.N.C. are fully liable for the company's debts and tax obligations, which represents a higher personal risk for them.
A limited partnership (S.E.C.) is made up of one or more general partners and one or more limited partners, who join forces for profit. The limited partners contribute financing to the partnership's common funds.
This legal form is mainly adopted by companies operating in high-risk sectors, such as professional sports.
Limited partnerships have some of the characteristics of legal entities, but are not legally considered as such.
The joint venture has a special legal status. It is neither a separate legal entity nor a legal person. It is simply represented by its partners, who act in their own name on behalf of the partnership.
The formation of a joint venture may be verbal or written, or simply result from the intention of the parties to join forces.
Thus, any unregistered business in Quebec that has a limited partnership or general partnership legal structure is considered an undeclared partnership.
A sole proprietorship is a legal form of business operated and managed by a single individual, often referred to as a "self-employed" or "independent contractor".
By law, a sole proprietorship is not separate from its owner. Consequently, the self-employed person assumes full financial responsibility and liability for the business. This means he or she benefits from all profits, but is also exposed to any losses.
Cooperatives are created by groups of companies or individuals sharing a common need or interest, whether economic, social or cultural. From a legal standpoint, a cooperative is considered a legal entity, and must therefore be registered with the Quebec Enterprise Registry.
Each member of a cooperative has equal decision-making power. This means that members can decide how they wish to share in the benefits of the cooperative.
An association is a legal form of enterprise created by a group of people with an interest other than making a profit. However, an association can generate income, provided that these funds are not intended to remunerate the members of the company.
The association structure is often adopted by companies with a more social mission, such as promoting education within a community.
In Quebec, there are two legally recognized types of association: the incorporated association and the contractual association. The former is considered a legal entity, while the latter is not.
A trust is a legal structure created by means of an arrangement in which a person entrusts the administration and management of his or her assets to a third party, thus enabling profits to be made for both parties.
Three legal forms of business can be considered trusts carrying on a commercial enterprise: business trusts, investment trusts and real estate operating trusts.
The trustee's administration of the assets depends on the terms of the contract. However, he or she generally assumes the same function as a director in a corporation.
Groupings of persons are a very broad legal category in Quebec. They include all groupings, with the exception of associations, of two or more people with a common objective, whether profit-making or not. Structures such as partnerships, expense companies and economic interest groupings are all part of this category.
The syndicate of co-ownership is made up of all the co-owners of a co-ownership. It is a legal person governed by the Civil Code of Québec. Its creation is made possible by the publication of a declaration of co-ownership in the Land Register.
The functions of the syndicat de copropriété include :
A non-profit legal entity is a group of people engaged in cultural, social, scientific, artistic, sporting, educational or other non-profit activities.
This legal form of business in Quebec, in the form of a non-profit legal entity, has specific characteristics:
A non-profit organization (NPO), also known as an association personifiée, is considered a legal entity. An NPO must operate for social, educational, religious, philanthropic, sporting or other purposes. No profits may be distributed to members of an NPO.
An NPO is run by a Board of Directors. Since an NPO has no shareholders, board members are elected by the organization's members at the general meeting.
A registered charity can be a corporation, a trust or an unincorporated association. A registered charity must also be registered as a charitable organization, public foundation or private foundation under Canada's Income Tax Act.
OBEs belong to a group of organizations known as "qualified donees". This allows them to issue tax receipts to their donors for tax purposes. What's more, their registration entitles them to income tax exemption.
Any company that is not incorporated in Quebec, but carries out all or part of its activities in the province, must, in accordance with current legislation, register with the Quebec Enterprise Register.
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