Forms of Business ownership

Most common forms of business in Canada are sole proprietorship,

partnership and corporation.

There are other forms of ownership available too such as Limited partnership, cooperatives and societies but the most common forms are the three highlighted above.

One thing to keep in mind is not to get confused with types of business, such as retail, service, etc. Most types of businesses can have any form of business ownership.

With the form of ownership of the business comes the liabilities and responsibilities. Cost wise, it is cheaper to form a sole proprietorship or partnership, but your personal liability is higher. Fornming a corporation is costly but your personal liability is limited.

But, keep in mind, the form of business ownership you choose will affect many aspects of your business operation, from attracting potential clients through filing taxes, so it's important to choose wisely. You may want to take a professional advice to help you decide, unless you are absolutely certain about the ownership of the business you want.

Where can I find sample business plans for free?

Most financial institutions and BDC will provide online sample business plans or downloadable templates. I personally like the templates and samples of RBC Small Business site. You can click here on the hyperlink and it will take you to the RBC Small business page. 

A great downloadable template is on the BDC site. You can download the word format and then fill in the gaps. Although I have to say the finished product at the end does not look nice with that template and it also does not have a comprehensive financial projection section in that plan. You have to download a excel file and it can get real complicated.

 

You can get good help from Enterprise Toronto if you are residing in Toronto. They let you access their library for free and you can access all resources at their centres for free as well. They have three locations. The functional ones are just two, one at the City Hall and the other at North York Civic centre. 

If you are willing to spend some money, there are accountants and lawyers who will assist you with business plan for a professional fee.

Business Plan - Is it necessary?

What is a business plan?

A business plan is your portfolio of documents that will give you the picture of your business,its operation and financial projections in a nutshell. It will summarize the objectives of the business and the plan to achieve those objectives.

Writing a business plan should be one of the first thing that you must do once you decide to start a business. The business plan must contain detailed financial projections, forecasts about your business's performance, and a marketing plan. The business Plan is your important tool to your success.

Why You Need To Write A Business Plan?

The business plan is the blueprint for your business. You need the blueprint to know where would you build your pillars and where to put the roof etc. Hence if you do not write a business plan, you will not have an idea on what to do next.

Here are five main reasons why you should write a business plan:

1. To test if the business idea is feasible.
2. Detailed budget and market plan to succeed in the business.
3. To make business effective and manageable.
4. To attract investors. 
   
5. To apply for a business loan from a financial institution.

Common Business terms and definitions:

Articles of Incorporation

The Articles of Incorporation are a legal document filed with a provincial or territorial government, or the federal government, which sets out a corporation's purpose and regulations. This is one of the documents necessary to the incorporation process.

Assets

Assets are any property owned by a person or business. Tangible assets include money, land, buildings, investments, inventory, cars, trucks, boats, or other valuables. Intangibles such as goodwill are also considered to be assets.

Accounts Receivable

In the accounting system, the entries in the accounts receivable ledger represent amounts of money you are owed. These amounts are usually the result of the sale of assets or for services you have provided.

Accounts Payable

In accounting, accounts payable are debts resulting from purchasing assets or receiving services on credit or on an open account. You have accounts payable when you have not yet paid for the assets or services you have received.

Small Business - commonly used terms

I come across a lot of small business owners and almost with everyone I find that commonly used business terms and definitions are not very clear or the business owners barely understand what I meant. I guess the business owners do their business and let the accountants figure out what those terms mean. I thought why not have a little start up with commonly used terms before we get into details of small business and small business financing. Here I started with 'A' and will post alphabetically. Hope you will get a clear understanding of the terms and definitions.