Choose your business structure
Last updated: April 2023
About business structures
The information we request from you when you set up your Square account can vary depending on the business structure you run. The information below will help you understand the options to choose from when you get started with Square.
Before you begin
Choosing your business structure is part of setting up your Square account. Learn more about signing up for Square in our Set up your Square account.
You may be requested to provide additional information or re-verify the documentation you have previously provided at any time to comply with applicable financial services laws and/or Square’s internal policies.
Types of business structures
A sole proprietorship is an unincorporated business owned exclusively by one person. In a sole proprietorship, the business owner is the business – the owner does not have a separate legal status from the business. If you’re running a small business on your own, you may choose to establish your business as a sole proprietorship.
:- Being a sole proprietor doesn’t prevent you from hiring other people.
- As a sole proprietor, you pay personal income tax on the net income generated by your business.
- You can operate and bill your customers in your own name, or operate under a registered business name and bill your customers or clients in the business’ name. Note: if you’re using a business name, you may need to file a DBA (Doing Business As) to open a separate bank account with that business’ name.
:While becoming a sole proprietorship can be a low-cost option, it won’t protect your personal assets: you’re responsible for all company payments, debts and expenses.
:Learnmore about sole proprietorship on the Government of Canada website.
A partnership is an association or relationship between two or more individuals, corporations, trusts or partnerships that join together to carry on a trade or business. Partners share profits or losses, resources, and risks. Partners can be individuals, other businesses, or public organizations. Generally, there are two types of partnerships: general partnerships and limited partnerships.
Corporations are businesses incorporated under the federal Canada Business Corporations Act (CBCA) or under similar provincial statutes, such as the Ontario Business Corporations Act. Public corporations can be listed or unlisted. Listed companies are registered on the stock exchange and their shares are traded openly. Unlisted public companies are firms with shares that aren’t listed on a stock exchange. Private corporations are corporations whose shares aren’t traded in the public stock exchange, and that aren’t controlled directly or indirectly by public corporations.
Find out more about types of corporations on the Government of Canada website.
Canadian organizations can also be incorporated under federal or provincial not-for-profit (NFP) legislation. Non-profit corporations are not always considered “registered charities” or “non-profit organizations” when it comes to income taxes, thus they aren’t necessarily exempt from paying regular corporate taxes under Canada’s tax laws.
The main difference between non-profit corporations and business corporations is their different structures: business corporations issue shares, while non-profit corporations do not issue shares. Business corporations have shareholders whereas non-profit corporations have members and do not pay dividends.
Find out more about nonprofit corporations on the Government of Canada website.
Other business structures may include associations, unit trusts and cooperatives. Associations are groups of people who work together for a common purpose other than profit. They may not need to be registered with the government. Unit trusts are trusts for which the interest of each beneficiary can be described at any time by referring to units of the trust.
Cooperatives are legally incorporated corporations owned by a group or association of persons to satisfy common needs such as access to products or services, or employment.