Knowledge of the main legal forms from which business owners may choose can help in determining whether workers have self-employed status and in assessing their assets and income. The main forms are:
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sole proprietorship;
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partnership; and
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compagny.
Sole proprietorship or REGISTERED BUSINESS:
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simple and inexpensive form of business;
need to register the business name at the courthouse of the district in which the business operates;
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need to obtain any permits required for operating the business;
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is directed and controlled by its owner;
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the owner receives any profits and bears any losses;
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if the business is dissolved, the owner must complete the appropriate declaration "Déclaration de radiation" which is available from the district courthouse and return it to the Inspector General of Financial Institutions. The dissolution document specifies the date of termination of operations.
When self-employed workers stop working, they are not required to cancel the registration of the business name.
PARTNERSHIP:
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is made up of partners who combine their efforts, money and assets to operate a business for the purpose of making a profit;
requires the registration of a business name, as described in relation to a sole proprietorship;
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requires that the partners agree to a written or oral contract of partnership;
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implies that the partners have decided on the contribution each one will make to the business, the administration of the partnership, the distribution of profits and losses, the purchase and sale of each partner's shares and the rules applicable to a dissolution of the partnership;
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permits profits to be shared among the partners, although the distribution may be unequal;
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requires that the partners share in the losses.
The COMPANY:
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is a legal entity made up of one or more shareholders;
is distinct from its shareholders;
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has its own assets, rights and obligations;
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may also be called a "joint-stock company" or "corporation";
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may be not-for-profit; it does not have the goal of making a profit. A recipient working in such a corporation is not considered to be self-employed;
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may be profit-seeking; its goal is to make a profit, which is distributed to its shareholders in accordance with the share distribution method or reinvested in the business;
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workers whose company is incorporated must pay themselves a wage in return for the work they do for their company;
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workers who are unable to pay themselves a wage must demonstrate that their company is in serious financial difficulty. A company that makes profits which are reinvested cannot be considered to be in financial difficulty:
- upon presentation of supporting evidence, the worker is considered to have no work income ; assistance can be paid without any resources being calculated in the determination of assistance;
- To qualify as liquid assets, securities must be currently traded on the market and be negotiable. As such, the shares held by a private company cannot be readily traded by the owner, whenever and to whomever he wants. Consequently, this asset cannot be converted into liquid assets in the short term, and constitutes PROPERTY.
- The exemptions for the property used for purposes of self-employment do not apply.
- The value of property is equal to its market value, that is, the price that a buyer would be willing to pay to acquire it.
- This value is difficult to establish since the share cannot be traded on the market. Moreover, it cannot be automatically established based on the nominal value as this does not always represent the real negotiable value.
- Since the band council cannot oblige the production of an expert accountant report given the costs, in the absence of such a report, the recipient’s declaration regarding the value of his shares must be retained.