I'm only familiar with American law on business entities, so Canadian law may differ (particularly in procedural details), but I suspect that the basic concepts are the same:
To begin, not every business is a legal entity separate from its owner. If I go out tomorrow and open a lemonade stand (or coffee shop, or McDonald's franchise, or whatever), without more, I'm operating the business as a sole proprietorship. The assets I use in the business, and the liabilities I incur in the business, are mine. If somebody sues the business and wins, they could take all my property, whether it's used in the business or not (subject to some significant legal restrictions; for instance, where I live, a person's home is protected against seizure for most types of debt).
However, it is possible to operate the business through a corporation, limited liability company, limited liability partnership, or similar business entity. Such entities (1) are treated as though they actually exist apart from the owner(s) of the business and (2) have their own assets and liabilities apart from the owner(s). (These days, a general partnership is also considered to exist apart from its owners--the partners--but each partner is liable for the liabilities of the partnership.) As a consequence, if somebody sues Metaphoreus, Inc. and wins, they could only take the property that belongs to Metaphoreus, Inc., and not property that belongs to me.
Typically, the legal existence of a business entity offering asset protection to its owner(s) begins when a document (sometimes called Articles of Incorporation or a Certificate of Formation) is filed with the state (again, in the U.S.) government. Thus, from the moment that document is filed with the government, the entity exists and can transact business. The entity will continue to exist until the owners of the entity determine to end its existence, or its existence is forfeited for some reason (for instance, because it failed to pay taxes due). Even bankruptcy (which is a formal court proceeding, not
this) will typically not end the existence of the entity.
Finally,
here's a link that looks at the advantages and disadvantages of available business structures in Canada.