We have gone over the three main structures used is the vast majority of cases, but there are other options available to you. These structures are quite specialized and usually used in only specific cases and specific circumstances. When it comes to for-profit businesses, the focus will always be on the three structures we just studied, virtually all of our clients fall on those three structures and in most cases entrepreneurs should be choosing one out of those three. Nevertheless, there are still other business or legal structures that are available, here are the most notable ones:
- Co-operative (Co-op): Co-ops are member-based associations in which every member owns an equal part of the organization. There can’t be a majority owner as there can be in a corporation. Co-ops tend to be community-focused and decisions are made democratically by vote; since all members own an equal amount, no individual’s vote counts more than someone else’s.
- Unlimited Liability Corporation (ULC): A ULC is a form of a corporation, usually used as a flow-through entity, meaning it is used to pump income through the organization. Although a ULC is a separate legal entity, the owners are liable for all debts and liabilities of the company. It tends to be used by US-based businesses opening up a Canadian subsidiary or holding assets in Canada.
- Society: A society is the legal structure designed for not-for-profit organizations. A society’s aim is not to generate profit, it can be formed for any lawful purpose including charity, art, sport, science, politics, environment, etc. While quite a common legal structure for organizations (there are thousands of societies in BC), we will not dive into societies since this course focuses on for-profit structures for entrepreneurs.
- Limited Partnership: a partnership in which there are two types of partner: a general partner and a limited partner. The general partner is responsible for running the business and making all decisions, and the limited partners’ liability is limited to the amount of money they put into the company.
- Limited Liability Partnership (LLP): a partnership where each partner is indemnified from the liability of the other partners. LLPs tend to be used by businesses providing professional services, such as accountants and lawyers.
None of these structures are a good fit for Jamie since they are working alone and with the goal of earning a profit. They won’t be a good fit for most other businesses either, they are meant for certain specific circumstances or objectives and work great in those cases. Nonetheless, it is still always useful to know what other options are available.