You have a great product or service. You've spent months finding suppliers, designing your logo, and writing an awesome business plan. You're ready to get out there and start selling.

But wait! Before you can reach the market, you need to know which business type is best for your company. There are four general business types: sole proprietorship, partnership, corporation, and co-operative.

So what's the difference? Which one is right for you? Are there any disadvantages of each one?

A sole proprietorship (SP) is a company that is owned by one person only; no other owner exists. As such, it does not require registration with government agencies like SEDI (the Securities Economic Development Initiative), Corporations Canada or Industry Canada.

A partnership is a company where two or more people (called "partners") own the business. For instance, if you and your partner are the only owners of your business, it falls under this type of business structure. No special steps are required to start up an informal partnership; however, formal partnerships may require registration with SEDI or Corporations Canada. Many partnerships have a written agreement about how each one will contribute to running the business and share in any profits or losses.

Corporation: If you want to give up some control over how your business is run by inviting others on board as shareholders, you might consider setting up a corporation. In other words, anyone who contributes to the business should have a say in how it's run. An advantage is that a corporation offers limited liability, meaning if your business fails because you made a bad financial decision, creditors can't take money from your personal bank account to cover the loss.

A co-operative (Co-op) is different from other business types because shares are not freely traded between people who are not members of the organization. A chartered co-operative does have shareholders, but their main goal is to contribute to the sustainable development of their community by providing goods and services at affordable prices for consumers. The membership elects an executive board to oversee all business activities on behalf of its members. There are numerous types of co-operatives throughout Canada; however, credit unions are one type most people are familiar with.

"The main difference between a co-op and other business types is that members of the co-operative aren't responsible for its debts, even if they own shares," says Michael Goldberg, president of MDG Business Group Ltd., a consulting firm in Montreal that specializes in co-operatives. "They also have democratic control because members elect their board of directors."

Co-ops are considered to be more socially oriented than other businesses so it can take longer to get one started. Members must contribute an initial financial investment based on how much business they would like the co-op to do with them. Most also levy fees or require members to engage in volunteer work for the organization. The cost varies depending on the industry but is generally less than what you would pay to start a corporation or partnership.

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