I looked at some of the signs in Vancouver a few weeks ago: “People not profits.” “Down with corporations.” All of them suggested that anyone who owned a corporation, or owned shares in a corporation, was somehow immoral and responsible for the economic downturn we still appear to be in.
Before my late father failed in business – he was wiped out in the crash of 1981 and 1982, and he declared bankruptcy in 1984 – he had probably created 2,500 jobs in his Victoria hotels and restaurants in the 1970s, together with jobs in the construction sector for those who built his properties, and jobs for bankers, accountants, architects, lawyers, restaurant supply companies and other businesses that benefitted from the activities of his “corporation.”
Small-business people like my father are the ones who take risks without prospect of a government bailout because they’re “too big to fail.” Like my father, they are not too big to fail and they fail all the time.
And most of them operate as “corporations.”
Most corporations in Canada are owned by small-business people, and many of them are family firms. I see these sorts of clients all the time. In fact, they make up much of my client base. These are people who don’t want to work for someone else but they are prepared to take on the arduous and risky prospect of working seven days a week, 12 hours a day, skipping statutory holidays and yearly vacations to succeed and to “put food on the table” for their families. .
These are people who pay their employees before they pay themselves, and they are the ones who employ an average of five Canadians through their corporations. They take huge risks, but by taking those risks they create jobs and opportunities for others. And if they don’t make a profit, they won’t be in business.
They incorporate to more easily allow other family members or business partners to own “shares” of the corporation – sharing the risks and the rewards that can come from ownership in a small business.
There are benefits for even the smallest of small businesses to operate through corporations. Among them: owners and directors aren’t exposed to personal liability from creditors unless they personally guarantee that obligation; tax benefits that are not available to individuals operating proprietorships (such as choosing a fiscal year that is not in line with the calendar year); and the banks are more likely to lend them money.
So if the Occupy protesters have concerns about income inequality, the concentration of capital and the ridiculously high compensation packages paid to CEOs and fund managers, then I think they still have some support in Canada.
However, leaving aside the drug overdose at the Occupy Vancouver site, lumping the small-business sector in with “big” business, and not understanding the enormous contribution of small business to our economy and to job creation, the Occupy movement lost a lot of support.
Special to The Globe and Mail
Tony Wilson practices franchising, licensing and intellectual property law at Boughton Law Corp. in Vancouver, and he is an adjunct professor at Simon Fraser University. His newest book, Manage Your Online Reputation, was recently published. His column appears every other Tuesday on the Report on Small Business website.
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