Business Structures In Quebec (All You Need To Know)

A business structure refers to a business’ legal form allowing business owners and entrepreneurs to operate a business.

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What are the different business structures in Quebec?

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What Is A Business Structure

A business structure refers to a business’s legal form allowing a business owner to operate a business.

In Quebec, an enterprise can be operated under different structures, such as a sole proprietorship, a business corporation, general partnership, limited partnership, undeclared partnership, non-profit legal person, a syndicate of co-ownership, association, cooperative, and trust operating a commercial enterprise.

Each of these structures offers different advantages and disadvantages.

For example, most public entities listed on the stock exchange in Canada operate their business as a corporation.

On the other hand, many small businesses are simply operated by sole proprietors (or self-employed individuals).

Keep reading as I will break down each of the legal forms that can carry out operations in Quebec.

Recommended article: Incorporating in Quebec

Business Structures In Quebec

There are different types of business structures that can operate an enterprise in Quebec.

Under the Civil Code of Quebec, an “enterprise” is defined as “the carrying on by one or more persons of an organized economic activity, whether or not it is commercial in nature, consisting of producing, administering or alienating property, or providing a service, constitutes the operation of an enterprise.”

Any economic activity, whether commercial or not, consists of the operations of an enterprise.

Let’s see how an enterprise can be operated in different legal forms.

Sole Proprietorship

A sole proprietorship is when a single person operates a business in his or her own name.

This is the easiest type of business structure to adopt as you do not have any particular formality in creating a sole proprietorship.

The moment you start doing business, you are automatically a sole proprietor (or self-employed).

Business Corporation

A business corporation is essentially a legal entity that is separate and apart from the business owner (or shareholder).

Creating a corporation requires that you file the corporation’s articles of incorporation and have the corporation registered before the Quebec business registry (Registraire des entreprises du Québec).

The business corporation provides the business owner limited liability protection, provides a more flexible ownership structure, can acquire its own assets and liabilities, will file its own taxes, and offer other benefits.

General Partnership

A general partnership is when a group of people gets together to form a partnership and carry out a common commercial activity.

The partners in a general partnership each contribute something to the partnership, such as property, capital, or knowledge.

The general partnership is formed on the basis of a partnership agreement and the partners designate a single name for all the partners.

The general partners are all solidarily responsible for the partnership’s debts and financial obligations.

Limited Partnership

A limited partnership is a type of partnership where you have one or more general partners and one or more limited partners.

General partners, just like in a general partnership, are solidarily liable for the partnership’s financial obligations.

Limited partners invest in the partnership in the form of capital or property and will have their liability limited to the extent of their investment.

Undeclared Partnership

An undeclared partnership is a type of partnership that is not registered with the Quebec business registry and is not considered to be a legal person.

The partners are individuals that may or may not have a written or verbal partnership agreement indicating their intention to form a partnership.

Each of the partners acts in their own name but on behalf of all the partners.

The undeclared partnership could be viewed as the gathering of several sole proprietors doing business as partners.

Non-profit Legal Person

A non-profit entity is a legal entity that is separate and apart from its business owners and is intended to operate an enterprise advancing social and economic missions rather than profits.

Non-profit entities can operate a non-profit business activity in social, cultural, religious, charitable, educational, environmental, or other activities where the main intention is not to earn profits but to advance its mission.

Syndicate of Co-Ownership

A syndicate of co-ownership is a type of legal person that is governed by the Civil Code of Quebec requiring co-owners of a divided co-ownership property to form and manage a syndicate of co-owners.

This type of entity is formed through the publication of a declaration of co-ownership in the Quebec land registry (Registre foncier du Québec).

Association

An association is similar to a non-profit legal entity where the purpose of the association is to promote a social or moral interest of its members, and can generate profits, but where the profits are not to be distributed to its members.

Cooperative

A cooperative is a legal person where its members have a common interest, whether social, economic, or cultural, and who gets together to operate a business based on the cooperative’s rules.

Similar to a corporation, the members of a cooperative have their liability limited to the value of their shares in the cooperative.

Trust Operating A Commercial Enterprise

A trust operating a commercial enterprise is a type of trust that is formed for the main purpose of generating profits.

This type of trust includes investment trusts, business trusts, real estate investment trusts, and others.

In this business structure, the trustees manage the property and assets of the trust according to its constituting documents.

The trust is managed for the benefit of its beneficiaries. 

Recommended article: Business registration in Quebec

Takeaways 

So there you have it folks!

What are the different business structures in Quebec?

In a nutshell, there are different types of business structures you can operate in Quebec, namely sole proprietorship, a business corporation, general partnership, limited partnership, undeclared partnership, non-profit legal person, a syndicate of co-ownership, association, cooperative, and trust operating a commercial enterprise.

Entrepreneurs and business owners should consider which business structure is optimal for their business.

Starting a business with the right structure will save you potentially a lot of money and headache.

Be sure to consult a qualified corporate lawyer for advice.

Good luck!

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