One of the three types of company structures in Canada is the general partnership, which has a variant known as a limited partnership. A single general partner with unlimited responsibility manages a limited partnership. Other limited partners back such as a general partner. The majority of the partnership’s profits go to the general partner. Even while the other limited partners contribute, they are not actively engaged in managing the partnership. The limited partners’ total liability is restricted to the money they have invested in the firm.
The requirements to form a limited partnership in Canada
In Canada, there aren’t many requirements to meet to form a limited partnership, thus those who are interested may do so by meeting the criteria listed below:
- Must have a minimum of two members, who may be corporations or natural individuals.
- The general partner is held legally responsible for the partnership’s obligations and liabilities.
- The members’ low responsibility will be advantageous to other members.
- The amount of initial capital needed to form a limited partnership in Canada is unrestricted.
- The revenue derived from sources outside of Canada is not subject to any limitations.
- The process of registering a limited partnership in Canada
A limited partnership’s name must always include the words “Limited Partnership” or “LP” as part of the name. Either French or English should be used for the name. According to the regulations regulating partnerships in a province, limited partnerships in Canada may be registered in that province. However, limited partnerships are created based on partnership agreements that are written within the confines of the law. Limited partnerships may only be founded for certain professions, such as law, accounting, and taxes, in select provinces. The members of a partnership must supply all required information, including their registered addresses, at the time of registration. The limited partnership is registered in the province where the names of the partners are listed in the Trade Register. The partners determine each partner’s share of the partnership after registration.
Steps to take when starting a business
The steps below must be followed to establish a limited partnership in Canada:
Company name
Choose a distinctive name for your organization or partnership and reserve it with the relevant authorities. A trademark infringement lawsuit may result if the applicant does not confirm that the name is not already registered with another business. The firm name must be reserved to prevent such occurrences. On the website of the Canadian Government, the name’s uniqueness is verified. On the Nuans website, you may, however, also look up the names that various businesses employ. The name should be simple to say, memorable, and not deceive the general public.
Registration
Federal or regional authorities conduct registration. In Canada, partnerships may be formed virtually or in person. The articles of association are signed by the founders. The Articles must be signed by a representative of the organization if the founder is a firm. A Memorandum of Association may be submitted by the applicant using the online application portal. The articles of association may be written in either English or French. The registered office address, which is used for all future contact, is the legal address provided by the founder upon establishing the business. A list of the first board of directors for the firm should also be provided by the applicant. The registration cost is CAD 250 for paper applications or CAD 200 for online processing.
Application processing
The competent authority analyzes the registration application once the aforementioned procedures have been followed and verify the organization’s articles of association to ensure that the activities are properly listed.
Obtain the necessary licenses, permits, and other prerequisites.
Businesses in the province or at the federal level are given a business number by the Canadian Revenue Agency (CRA) for purposes of the GST/HST sales tax, payroll deductions, corporate income tax, and import and export levies and fees.
Necessary documents
To establish a limited partnership firm in Canada, the following papers are needed:
- Memorandum and Articles of Association and Certificate of Incorporation.
- Memorandum of Association for a federal corporation or business established in a Canadian province or territory (Form 3001).
- Information about the registered office and the first Board of Directors (form 3002).
- Name Lookup News from the Nuans.
- Letter from the Canadian Registry of Corporations approving the name of a company or partnership.
- Federal Business Number and the Income Tax Number for business transactions.
- Legal citation.
- Proof of the shareholders’ residential address if they are foreigners.
- A duplicate of the founders’ passports or visas.
- Details about the paid-up capital necessary to create a company or partnership.
- Application submission cost.
