In Canada, the LLP is controlled by Company Law, however only the provinces of Ontario and British Columbia allow for its unrestricted registration. Because of this, it is also subject to provincial laws that are in effect locally. Only certain types of professionals may use the Canadian LLP in other jurisdictions.
Canadian limited liability partnership characteristics
It is crucial to be aware that the Canadian LLP has a few unique characteristics, one of which is the absence of shareholders in favor of members or partners. Additionally, one of the general partners may act as the partnership’s manager. Both a secretary and a manager’s residence are not prerequisites for the company. When establishing an LLP in the country, beneficial ownership is an option. The 5-year lifetime of the Canadian LLP, which may be extended, is another element of the entity.
The requirements for forming an LLP in Canada
The procedures for establishing an LLP in Canada are not onerous, but individuals who are interested in doing so should take the following into account:
- It must have at least two members, who can be either natural persons or corporations
- At least one of the members must be a general partner who will have limited liability for the partnership’s debts and obligations
- The remaining member or members will have full debts and obligations
- The minimum authorized share capital to establish an LLP is $1,000 Canadian.
It is important to highlight that the limited liability partnership’s members are not subject to Canadian residence restrictions.
How to establish a limited liability partnership in Canada
A partnership agreement will serve as the foundation for the Canadian formation. The following registration requirements must be followed when starting an LLP in Canada:
- The business name must end in Limited Liability Partnership, or simply LLP;
- Full information about the partners must be provided at registration;
- The partners’ names must be registered with the Trade Register in the province where the partnership is formed;
- The partnership must have a physical address in the province where it will conduct business;
- The partners in the business must decide on the contribution of each member.
Process for registering an LLP in Canada
The process of registration includes:
Obtain the name of an authorized company
A company name may be accepted or rejected by the Registrar. Getting pre-approval before continuing with additional registration processes is great practice. The words “limited liability partnership” or “société à responsabilité limitée” or the acronyms “LLP”, “L.L.P.” or “s.r.l.” must appear as the last words or letters of the company’s name.
Register with the Ministry
Send a request to the ministry of consumer and government services. When filling out the applications or requests, have a copy on hand. A BIN (Business Identification Number) number will be stamped on the Ministry-certified form; this number is necessary for your registration application.
Acquire professional liability insurance
Before you may finish registering your business and start practicing public accounting or offering accounting services to the general public, you must produce adequate evidence of professional liability insurance.
Public accounting license (PAL)
If you practice public accounting and are the lead engagement person in charge of signing reports or statements published or mostly prepared in Ontario, you will need a PAL from CPA Ontario.
LLPs taxation in Canada
The taxes of this structure is one of the most significant benefits of establishing an LLP in Canada, particularly for international investors. They are not subject to corporate income taxes at the federal, provincial, or state levels. Due to this, international business owners and organizations desiring a presence in the country choose to use the LLP. Like any other Canadian business, the LLP is expected to keep yearly accounting records and submit financial statements regularly.
