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Can I run multiple businesses under one corporation in Canada?

If you’re an entrepreneur with multiple business ideas or existing ventures, you may be wondering if you can operate them all under one corporation in Canada.

The short answer is yes. In most cases, you’re allowed to run multiple businesses under one corporation, even if the businesses do completely different things. However, there are some important factors to consider before setting up your businesses this way.

The Benefits

There are a few potential benefits to running multiple businesses under one corporation:

  • Cost Savings. Streamlined administration and reduced costs since you only have one entity to manage. This means only one annual corporate filing and one set of annual financial statements.
  • Tax Offsets. The ability to offset profits and losses between your different businesses for tax purposes. This can help with your tax planning.
  • Financing Options. Potential increased access to financing, especially if one business is funding the startup costs of another.
  • Resource Sharing. Flexibility to pivot and shift resources between your businesses as needed.


The Risks and Downsides

Although it’s cheaper and requires less administration to operate multiple businesses under one corporation in Canada, there are also significant risks and downsides to be aware of:

  • Shared Liability. If one business fails or has liabilities, the creditors can make a claim on the assets of the other businesses. This puts everything in one basket and means a single source of failure puts it all at risk. See our Guide to Limiting Liability for Business Owners to review more information about these risks and how they may be limited.
  • Administrative Challenges. There could be administrative challenges with payroll, accounting, licenses, and legal compliance if you have several different operations under one roof. If any of the businesses require special regulatory permissions (such as professional services business for doctors, lawyers, and accountants), operating several different businesses under one corporation may not even be allowed.
  • Combined Financials. Combining all financials makes it harder to monitor profitability and expenses for each individual business. This makes it harder to identify issues with your numbers. It also makes it difficult to prove that your business is profitable to potential buyers.
  • Difficult to Sell. Selling the combined company as a whole would be very difficult, if not impossible. There are very few buyers for hair salons that also sell cars. To sell any individual business unit, you’d likely have to restructure and break apart the combined corporation first. Doing this right before sale could mean losing out on certain tax advantages, like the lifetime capital gains exemption of the sale of shares.
  • Ownership Limitations. With all businesses owned by one corporation, you cannot bring in a new part owner to any single business venture. The corporate structure makes it an all-or-nothing scenario for ownership. If you wanted to take on a business partner or sell a portion of one specific business, you would first need to separate it into its own entity. This requires planning and can be expensive.
  • Marketing Challenges. Branding and marketing a company with totally unrelated offerings can be confusing for customers. The corporate name you choose is unlikely to be appropriate for all of the businesses being operated by the corporation. Imagine a company called Dwight’s Donuts Ltd. selling office paper products. That’s going to make sales calls difficult. When choosing a business name, it’s usually best for the name to clearly convey your core offering.

Tips for Making It Work

If you decide that operating multiple businesses under one corporation makes sense for your situation, here are some tips you should take into account:

  • Get Advice from Professionals. Consult a business lawyer and accountant to ensure it is structured properly from a legal and tax perspective.
  • Focus on Synergies. Make sure the businesses are synergistic and able to leverage shared resources. Don’t force combinations that don’t make sense. While it will cost money to incorporate and maintain a separate entity, it can easily save you a significant amount of both time and money in the long run.
  • Document the Arrangement. Have a cost and revenue-sharing agreement between the ventures to allocate expenses, minimize disputes, and avoid co-mingling funds. At the very least, you will want separate bank accounts for each business unit.
  • Monitor Risks. Monitor the risks closely and be prepared to restructure if issues emerge like competing interests or growth constraints.
  • Plan for a Sale. If you plan to sell any individual business, make sure that you give yourself enough time. If you want to use your lifetime capital gains deduction, you will likely need to do some restructuring a minimum of 2 years in advance, which will not be cheap.

The Bottom Line

The bottom line is that the benefits of running multiple different businesses under one corporation rarely outweigh the significant downsides. The chances are that you will eventually have to undergo costly restructuring, which will offset your initial cost savings very quickly. Make sure to carefully weigh the pros and cons, and speak with legal and accounting professionals before deciding to combine multiple businesses under a single corporation.

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