One of the most common types of business ownership is the sole proprietorship. In this type of corporate structure, the proprietor is solely accountable for every facet of the enterprise. Due to its simplicity in implementation and maintenance, sole proprietorship is a fantastic choice for small firms or startups. But one of the most frequent queries from business owners is whether they actually require a business number.
The Canada Revenue Agency (CRA) issues businesses with unique nine-digit numbers known as company numbers to help them be identified. Unless they have staff or need to register for the Goods and Services Tax/Harmonized Sales Tax (GST/HST), sole proprietors are not obliged to have a company number. In order to submit payroll deductions to the CRA, a sole proprietorship with employees needs to have a company number. A sole proprietorship must also register for the GST/HST and receive a company number if its yearly gross revenue exceeds $30,000.
In light of this, operating a firm as a sole proprietor may not be the best option. This is due to the personal liability of a sole proprietor for all debts and obligations of the company. The owner’s private assets can be in jeopardy in the case of legal action or financial loss. Businesses that deal with hazardous products or those in high-risk industries like construction might wish to think about different business ownership structures like a corporation or a limited liability partnership (LLP).
To answer the subsequent inquiries, no, Walmart is not a sole proprietorship. It is a publicly traded international organization that engages in retail business. Additionally, Coca-Cola is not a sole proprietorship. A publicly traded firm, it is a multinational beverage corporation. On the other hand, when Mark Zuckerberg launched Facebook, it first operated as a sole proprietorship. But in 2012, it changed its legal status to company and went public.
In conclusion, unless they have staff or are obliged to register for the GST/HST, solo owners are not required to have a company number. To reduce personal liability, high-risk organizations may want to think about various types of corporate ownership. While Facebook began as a sole proprietorship but later changed to a corporation, Walmart and Coca-Cola are not sole proprietorships. Before selecting a business structure, it is always advised to speak with a lawyer or an accountant to ascertain the best choice for your unique requirements.
In a sole proprietorship, the owner is in charge of all debt repayment as well as entitlement to all earnings.