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A friend and I have a great startup idea which we plan to put into action at the beginning of the summer. We've also worked some revenues into our business model by allowing users to pay for some perks.

By law, do we need to create a company to receive this cash? I saw another similar question, but only advice was given. We live in Canada, and we're unsure if we HAVE to be a registered company before receiving any kind of profits online.

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Are you going to accept credit card payemnts? – JeffO Apr 4 '12 at 18:03
Yes, most likely. Probably through a secure online payment method (and something that isn't Paypal) – MaxMackie Apr 4 '12 at 18:04

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By law, do we need to create a company to receive this cash?

No, you don't have to form a distinct entity to do so. This is called running a "sole proprietorship":

http://en.wikipedia.org/wiki/Sole_proprietorship

http://sbinfocanada.about.com/cs/startup/a/formsbusiness.htm

That said, business owners form distinct business entities to protect themselves from certain forms of liability. Furthermore, most online payment processors require the existence of such an entity.

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What if the startup has two founders? Does this still apply? – MaxMackie Apr 4 '12 at 0:58
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Yes, in the case of multiple owners, it's known as a General Partnership: en.wikipedia.org/wiki/General_partnership – Henry the Hengineer Apr 4 '12 at 1:29

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