As an entrepreneur, you can choose several business structures for your operations. They often differ in management, liabilities, membership, and tax payments. One of the structures you can adopt is a partnership.
Suppose you live in Ontario and want to set up a partnership. How will you go about the process? This article will give you insights into setting up and registering a partnership.
What Is A Partnership?
A partnership is a structure made up of several partners who share the profits and losses of the business, depending on the agreed terms. You can run a general, limited, or limited liability partnership.
A general partnership has two or more partners that run the business’s daily operations and are liable for business liabilities and debts. In a limited partnership, there are general partners who manage operations and are liable for liabilities, and limited partners who don’t run daily operations and aren’t liable for business debt. On the other hand, the limited liability partnership comprises two or more partners who aren’t liable for company debts and liabilities.
With the definition aside, here’s the guide to business registration in Ontario for partnerships:
Get A Business Name
Getting a business name is the first step to business registration in Ontario. It’s important to use a proper name that will more or less represent your company’s identity. When naming your business, the main thing to do is find a unique name. A unique name is one that no other business is using in Canada. Similar business names could bring confusion among customers, which can negatively affect business operations. There are also legal consequences if the other business files a case against you regarding name similarity.
You can use various online registries to check your business name’s availability.
Register Your Business Name
Once you’ve confirmed your business name is unique, you should register it. It’s a requirement when registering a business in Ontario, with certain exceptions to business structures like sole proprietorships. In Canada, you must register your business name in the province where you want to run your operations. However, it’s often not a requirement in Labrador and Newfoundland provinces. Be sure to confirm this before proceeding.
Registration involves filling out a form and making a small payment. You don’t have to visit your provincial government offices for the process—you can complete the process online.
Register For Licenses, Permits, And Taxes
With the registration of your partnership, you need to make payments to legalize your operations, most of which are recurrent. These are licenses, permits, and taxes.
The permits and licenses you should register often depend on your business operations. Some operations that are food, and alcohol-related, among others, require special licenses to operate, which you must obtain.
The taxes you’ll pay in Ontario depend on the province you choose to run your operations. Be sure to check with your provincial government or the Canada revenue agency for accurate information since many factors are in play. Some of the common taxes you’ll pay as a partnership are GST and HST. GST refers to Goods and Services Tax, with HST meaning Harmonized Sales Tax. In most cases, businesses that generate an average revenue of more than USD$30,000 yearly are the ones required to pay these taxes.
Once you’ve done all the above procedures, be sure to submit the documents to the relevant bodies for the complete registration of your partnership in Ontario, Canada.
Create A Partnership Deed
A partnership deed is one of the documents used in registering a business in Ontario. It provides information about your business partnership to the registering body.
This deed contains the name of the business, the names, addresses, and contacts of the partners, the intended business operations, partnership duration, loss and profit-sharing ratio, and how you’ll dissolve your partnership when the need arises. Since the loss and profit-sharing ratio often depends on capital contribution, you might be required to disclose the amount of capital each partner contributed. This partnership deed assists in decision-making, especially when there are conflicts.
The above are but a few of the information you require to divulge. It’s based on the partnership you adopt, whether an LLC, general or limited partnership. Be sure to prepare all the documents the registering body will require.
A partnership is the ideal business structure if you’re looking to share business losses and profits to reduce the liability burden. As an entrepreneur who wants to run a partnership business in Ontario, the discussion above has given a guide. Consider referring to it as you undertake the process, noting that the requirements might differ from province to province in Canada. Therefore, ensure you do thorough research for the process; relying on your provincial government will come in handy.