The government initiates the approximate processing time after all necessary paperwork have been successfully submitted. Some provinces such as Nova Scotia, Newfoundland, Saskatchewan and Prince Edward Island may take longer time.
Note: If you want to add more than 3 partners, please
proceed with these 3 partners and place order. Then give us a call or email us and we can
manually add any additional partners.
In order to open a bank account or receive a license or permit, a partnership agreement must be made. Each partner's obligations should be included in the document, which should be done by a lawyer.
You must register for an export or import account if you intend to export or import into or out of Canada. This account is required by the Canada Border Services Agency (CBSA) in order to recognize and handle Customs papers.
Choosing the right business structure is one of the most important decisions when you want to start a business. Among the many available business structures, a Limited Partnership (LP) is one of them. It is a popular choice for entrepreneurs who want to combine the advantages of limited liability with the flexibility of a partnership.
What is a Limited Partnership?
A Limited Partnership is a type of Partnership business that consists of two types of partners: 1. General partner(s) and 2. limited partner(s). It consists of at least one general partner and one or more limited partners. Typically, General partners manage the business, and he has full liability for its debts and obligations. On the other hand, limited partner(s) only contribute capital and enjoy limited liability. That means they are only responsible for the amount of capital they invest in the partnership business.
Basic Features of a Limited Partnership
No Legal Entity: A Limited partnership is not a separate legal entity from its partners.
Two Types of Partners: As mentioned, a limited partner has two types of partners: general partners and limited partners. General partner’s main task is to handle day-to-day operations and are fully liable for the business’s debts. Limited partner (s) typically have no control over management and have liability limited to their investment.
Liability Protection: A Limited partner(s) is protected from personal liability beyond his investment. However, a general partner(s) does not have this protection.
Profit Sharing: Profits and losses are shared among partners depending on the partners’ contributions. Basically, partnership agreement usually outlines the process.
Flexibility in Management: General partner(s) has the authority to make business decisions without interference. A limited partner(s) does not engage in daily management. They mainly act as an investor.
What information is needed to register an Ontario Limited Partnership?
To register your Ontario Limited Partnership, you will need:
Attracting Investors: LPs are ideal for those who want to invest in business without engaging in management responsibilities.
Tax Benefits: LPs benefit from pass-through taxation, meaning profits are taxed at the individual partners’ tax rates instead of at the entity level.
Operational Flexibility: The general partners have the freedom to manage the business as they see fit, without needing consent from limited partners.
Reduced Personal Risk for Limited Partners: As mentioned earlier, limited partners are only liable for their invested capital. Their personal assets are protected in this regard.
How to Register a Limited Partnership
The process of registering a General Partnership depends on location, but the general steps are similar.
Choose a Name for Your Limited Partnership: At first, you must choose a unique name. The name must not already used. You can do a preliminary search for your business name. If the name is available, then reserve the name with the Ontario Reservation report.
Draft a Partnership Agreement: Although it is not always mandatory. Drafting a detailed partnership agreement is recommended. It will protect the rights and responsibilities of partners. It outlines the terms and conditions of the partnership. It serves and shows as a roadmap for how the business will operate. Also includes detailing the responsibilities, rights, & duties of each partner, as well as how profits, losses, and decision-making will be handled.
Register with Provincial Authorities: Register the business name through Service Ontario via Business Ontario online, paying the required fee. We are an official intermediary of service in Ontario
Collect Business Number:Apply for a Business Number (BN) with the Canada Revenue Agency (CRA) for tax reporting and to handle other federal tax obligations.
FAQs on Limited Partnership Registration
What are the differences between a Limited Partnership and a General Partnership?
A Limited Partnership has both general and limited partners. But, General Partnership consists only of general partners who have unlimited liability.
Can a Limited Partnership have more than one general partner?
Yes, an LP can have multiple general partners. Each can share responsibility for the business’s management and liabilities.
How long is the registration valid, and when should I renew it?
In Ontario, Limited Partnership registrations are typically valid for 5 years. You will need to renew the registration before it expires. Business Ontario Corporate Services Inc. can assist with reminders and the renewal process. To renew a Limited partnership government gives 60-day grace period. If you do not renew your Partnership, it will automatically cancel.
How is a Limited Partnership taxed?
Limited Partnerships are not subject to double taxation as like a corporation. Limited Partnerships are not taxed as separate entities. Instead, profits and losses are passed through to the partners, who report them on their personal tax returns.
Can I add or remove partners after registering the Limited Partnership?
What is the liability of a limited partner in an LP?
A limited partner’s liability is restricted to their investment in the business. They are not personally liable for the debts or obligations.
Can a limited partner be involved in managing the business?
Limited partners typically do not participate in management. If they do, they may risk losing their limited liability status and being treated as a general partner.
How long does it take to register a Limited Partnership?
The time frame depends on the registration method:
In-person or mail registration can take 5 to 10 business days.
Online registration typically takes 1 to 3 business days.
Expedited registration is available for an additional fee and can be completed in 1 business hour.
What happens if a general partner leaves or dies?
The LP may be dissolved unless the partnership agreement provides for continuity or replacement of the general partner.
Can I convert an existing business into a Limited Partnership?
Yes, you can convert an existing business into an LP, but it will involve additional legal steps such as filing conversion documents and restructuring ownership interests.
