3 Sole Proprietorship Misconceptions that Can Affect Young Professionals in Quebec


One of the most important steps in the early days of starting a business is choosing the right business structure. All too often, however, eager young professionals are not informed to make the right business structuring decision. One commonly believed myth about business structuring is that incorporation is always the correct choice for professionals who are serious about starting their own business. This is not always the case.

In fact, young professionals have several choices when deciding on how to structure the business, which necessarily includes incorporation. However, a young professional’s business may also be registered as a sole proprietorship.

Often, registering as a sole proprietorship is the wiser choice, particularly when the young professional’s business needs are fully considered. It can be a mistake to incorporate rather than register as a sole proprietorship, and some professionals make these mistakes based on common misconceptions.


Here are three key misconceptions about sole proprietorships vs incorporation that young Quebec professionals ought to keep in mind.


Misconception #1: It Is Risky to Register the Business as an Extension of the Individual

All too often, you may hear young and well-meaning professionals argue that sole proprietorships are problematic because they become an extension of the individual. In other words, you will personally be responsible for business debts and taxes incurred.

Realistically, however, understand these obligations will be extremely minimal for the vast majority of starting businesses. Registering the business as a sole proprietorship is a simple and inexpensive process, whether you complete the process yourself or do so with the assistance of a Canadian notary firm. In either case, structuring as a sole proprietorship is a far easier process than the complexities of incorporating.

For dedicated young professionals who are ready to “hit the ground running”, a sole proprietorship in Quebec is often the way to go. The limited liability and corporate tax structures available through incorporation often range from minimal to non-existent for most businesses that start with low overhead costs, such as consulting.


Misconception #2: Sole Proprietorships Seem Less Professional

This is a fear that, realistically, has no basis in the real world. Ask any Canadian business owner when the last time someone asked whether they registered as a sole proprietorship or incorporated. In all likelihood, their response will be a simple, “Never.”

Registering as a sole proprietorship in Quebec means you have registered as a legally active business, and in fact, most businesses currently operate as sole proprietorships. There is absolutely no harm to the professional appearance of your business by opting for a sole proprietorship instead of incorporation.


Misconception #3: Growth Opportunities Will be Limited

Not only is this myth untrue, but it is arguably easier for most entrepreneurs to grow a business through a sole proprietorship in the early days of the business. Why? Opportunities are inherently the same whether you incorporate or register as a sole proprietorship, in that both business structures let you apply for loans and lines of credit.

However, young professionals who have already established good credit scores can enjoy an inherent advantage over corporations that are starting out without a credit history. Sole proprietorships treat the business as an extension of you, the individual, which is a key benefit if you have worked hard to achieve a good credit score and an established credit history.

In short, don’t just assume that incorporating is the right choice for your business. All small businesses are unique, and the correct structure for your business should reflect this fact.

If you would like to make sure that a sole proprietorship is the correct choice for your business, we highly encourage you to speak with a legal advisor. They will be able to give you the answers you seek with a simple phone call.