Embarking on a business venture in Ontario? Consider the power of collaboration with a partnership! This business structure, where two or more individuals come together, offers a balanced approach to entrepreneurship. It’s a practical choice for many, simplifying the startup process and sharing responsibilities.
Take a moment to explore partnership options and learn how to register a partnership in Ontario. Once you’ve settled on the type of partnership, registering and obtaining a business number and tax accounts is a straightforward process. Together, you and your partner(s) can shape the future of business in Ontario!
- Forming a partnership can be a good option for small businesses in Ontario.
- There are different types of partnerships to choose from (general partnerships, limited partnerships, and limited liability partnerships), each with its own advantages and disadvantages.
- To register a partnership in Ontario, you’ll need to follow a specific process and obtain a business number and tax accounts.
Types of Partnerships in Ontario
Here’s a quick summary of the three main types of partnerships in Ontario:
A general partnership is the most common type of partnership in Ontario. In a general partnership, two or more people own and operate a business together. Each partner is responsible for the debts and obligations of the partnership, and they share the profits and losses equally (unless otherwise specified in a partnership agreement).
A limited partnership is a type of partnership where there are two types of partners: general partners and limited partners. General partners manage the business and are personally liable for the debts and obligations of the partnership. Limited partners, on the other hand, are passive investors who contribute capital to the partnership but have no say in the management of the business.
Limited Liability Partnership
A limited liability partnership (LLP) is a type of partnership where all partners have limited liability for the debts and obligations of the partnership. This means that each partner is only liable for their own actions and not the actions of the other partners.
General Partnerships in Ontario
A general partnership is a type of business structure where two or more people carry on a business together with a view to profit. In a general partnership, each partner is personally liable for the debts and obligations of the partnership, which means that your personal assets could be at risk if the partnership is sued or goes bankrupt.
To register a general partnership in Ontario, you will need to follow certain requirements. All partners must be at least 18 years old and have no criminal record. A general partnership can be registered by two or more individuals or corporations, and there must be a minimum of two partners. The corporations must be registered in Ontario and in good standing with the government.
One of the advantages of a general partnership is that it is relatively easy and inexpensive to set up. You can register your general partnership online through ServiceOntario for a fee of $60. Once you have registered, you will receive a Master Business License (MBL) which will allow you to conduct business in Ontario.
However, it’s important to keep in mind that a general partnership has some drawbacks as well. As mentioned earlier, each partner is personally liable for the debts and obligations of the partnership. This means that if one partner makes a mistake or incurs a debt, all partners are responsible for it. Additionally, if one partner decides to leave the partnership, the partnership may need to be dissolved and re-registered with the government.
Limited Partnerships in Ontario
A limited partnership is a type of partnership in which there are one or more general partners and one or more limited partners.
General partners are responsible for managing the day-to-day operations of the business and have unlimited liability for the partnership’s debts and obligations. This means that if the partnership is sued or cannot pay its debts, the general partners are personally liable for the partnership’s debts.
Limited partners, on the other hand, are investors in the partnership and do not take an active role in managing the business. They have limited liability for the partnership’s debts and obligations, which means that their personal assets are not at risk if the partnership is sued or cannot pay its debts.
Limited partners are also limited in their ability to participate in the management of the business. If a limited partner becomes too involved in the management of the business, they may lose their limited liability protection and become personally liable for the partnership’s debts and obligations.
Registering a Limited Partnership in Ontario
To register a limited partnership in Ontario, you will need to file a Form 3 – Initial Notice of Limited Partnership with the Ontario Ministry of Government and Consumer Services. The form must include the following information:
- The name of the limited partnership
- The address of the registered office of the limited partnership
- The name and address of each general partner
- The name and address of each limited partner
- The nature of the business of the limited partnership
Once you have filed the Form 3 and paid the registration fee, the Ministry will review your application. If your application is approved, you will receive a Certificate of Limited Partnership.
It is important to note that registering a limited partnership in Ontario does not provide any intellectual property protection. If you want to protect your business name or logo, you will need to register a trademark with the Canadian Intellectual Property Office.
Limited Liability Partnerships in Ontario
A Limited Liability Partnership (LLP) is a type of partnership that provides some protection for partners against personal liability for the partnership’s debts and obligations.
To register an LLP in Ontario, you will need to follow a few steps. First, you will need to request a pre-approved firm name from the Registrar. This can be done online or by mail, and there is a fee for this service. Once you have your pre-approved name, you can move on to the next step.
The next step is to register your LLP with the Ministry of Government and Consumer Services. You will need to provide some basic information about your partnership, such as the names and addresses of all partners, the nature of your business, and the date you plan to start operating. There is a fee for this registration, and you will need to renew your registration annually.
After you have registered with the Ministry, you will need to obtain professional liability insurance for your LLP. This insurance provides protection for the partnership and its partners against claims of negligence, errors, or omissions in the provision of professional services. You will need to provide proof of this insurance to the Registrar before you can move on to the final step.
The final step is to register your LLP with CPA Ontario. This registration is required if any partner in the LLP is a CPA in good standing. You will need to provide proof of your registration with the Ministry and your professional liability insurance, as well as pay a registration fee.
Cost to Register a Partnership in Ontario
Current partnership registration costs in Ontario are as follows:
|Type of Partnership||Online Registration||Mail Registration||Email Registration|
|Limited Liability Partnership||$60||$60||$60|
Naming Your Partnership
When naming your partnership, there are certain legal requirements you must follow to ensure that your chosen name is valid and legally recognized. Additionally, you will need to check the availability of your chosen name to make sure that it is not already in use by another business in Ontario.
Under the Ontario Business Names Act, you must register your partnership name unless you are using only the names of the partners.
For example, if the names of the partners are John Smith and Mary Jones, you can call your business Smith and Jones, and you do not need to register. However, if you choose to use a business name that is different from the names of the partners, you must register your business name.
Your partnership name must not be misleading or confusing to the public. It must not contain any prohibited words or phrases, such as “Royal” or “Government of Canada,” without proper authorization. Additionally, your partnership name must not infringe on any existing trademarks or copyrights.
Checking Name Availability
Before you can register your partnership name, you must ensure that it is available for use. You can check the availability of your chosen name by searching the Ontario Business Registry. This database contains information on all registered businesses in Ontario, including partnership names.
If your chosen name is already in use by another business in Ontario, you will need to choose a different name. You can search for available names using the NUANS (New Upgraded Automated Name Search) system, which is a national database of existing business names. This system will help you determine if your chosen name is unique and available for use.
Once you have chosen a unique and available name for your partnership, you can proceed with registering your business name with the Ontario government.
How to Register a Partnership in Ontario
The process to register a partnership in Ontario is fairly straightforward. Here are the steps you need to follow:
Filling Out the Form
The first step is to fill out the registration form. You can do this online through the ServiceOntario website or by mail. The form will ask for basic information about your partnership, such as the name of the partnership, the address, and the names and addresses of the partners.
Make sure you have all the necessary information before you start filling out the form. You’ll also need to decide on a name for your partnership, which should be unique and not already in use by another business in Ontario.
Submitting the Form
Once you’ve filled out the form, you can submit it online or by mail. If you’re submitting it by mail, make sure to include the fee and any other required documents.
If you’re submitting the form online, you’ll need to create an account with ServiceOntario and pay the fee using a credit card or Interac Online. The fee for registering a partnership in Ontario is currently $60.
Paying the Fee
The final step is to pay the fee. As mentioned, the fee for registering a partnership in Ontario is $60. You can pay this fee online using a credit card or Interac Online, or by including a cheque or money order with your registration form if you’re submitting it by mail.
Once your registration has been processed and approved, you’ll receive a Master Business Licence (MBL) from ServiceOntario. This document serves as proof that your partnership is registered with the Ontario government.
That’s it! The process of registering a partnership in Ontario is fairly simple and straightforward. Just make sure to have all the necessary information and documents ready before you start, and follow the steps outlined above.
Obtaining a Business Number
When registering a partnership in Ontario, obtaining a Business Number (BN) is an essential step. A BN is a unique nine-digit identifier assigned by the Canada Revenue Agency (CRA) to identify your partnership for tax purposes.
To obtain a BN, you can register online through the CRA’s Business Registration Online (BRO) service. Alternatively, you can register by mail, phone, or fax. To register by mail, you will need to complete Form RC1, Request for a Business Number, and mail it to the CRA.
When registering for a BN, you will also need to indicate which CRA program accounts your partnership requires. For example, if your partnership has employees, you will need to register for a Payroll Deductions Account. If your partnership sells goods and services, you will need to register for a Goods and Services Tax/Harmonized Sales Tax (GST/HST) Account.
The six main CRA program accounts are as follows:
- Goods and services tax/harmonized sales tax
- Payroll deductions
- Corporate income tax
- Registered charity
- Information returns
Once you have registered for a BN and CRA program accounts, you will receive a BN confirmation letter from the CRA. This letter will contain important information, including your BN, program account numbers, and effective dates of registration.
It is important to keep your BN and program account information up-to-date with the CRA. You can make updates online through the CRA’s My Business Account service, or by contacting the CRA directly.
Setting Up a Partnership Agreement
A partnership agreement outlines the terms and conditions of the partnership and ensures that all partners are on the same page. Here are some tips for creating a partnership agreement:
Define the Partnership
The partnership agreement should clearly define the partnership, including the name of the partnership, the purpose of the partnership, and the duration of the partnership. This information should be included in the preamble of the agreement.
Outline the Roles and Responsibilities of Each Partner
The partnership agreement should outline the roles and responsibilities of each partner. This includes the duties of each partner, the amount of time each partner is expected to commit to the partnership, and the compensation each partner will receive.
Define the Profit and Loss Sharing
The partnership agreement should also define how profits and losses will be shared among the partners. This includes how profits will be distributed, how losses will be allocated, and how the partnership will handle any debts or liabilities.
Address Dispute Resolution
Disputes are bound to arise in any partnership. The partnership agreement should include a section on dispute resolution, outlining how disputes will be resolved and what steps will be taken to resolve them.
Include a Termination Clause
Finally, the partnership agreement should include a termination clause, outlining the circumstances under which the partnership may be terminated. This could include the death or withdrawal of a partner, or the dissolution of the partnership.
Creating a partnership agreement may seem like a lot of work, but it’s an important step in setting up a successful partnership. By clearly defining the terms and conditions of the partnership, you can avoid misunderstandings and disputes down the road.
Registering for Tax Accounts
When you register a partnership in Ontario, you will need to apply for tax accounts with the Canada Revenue Agency (CRA). Here are the steps to follow:
- Business Number (BN): You will need to register for a Business Number (BN) with the CRA. A BN is a unique identifier that the CRA uses to identify your business. You can register for a BN online through the Business Registration Online (BRO) service.
- Goods and Services Tax/Harmonized Sales Tax (GST/HST): If your partnership’s annual revenue is over $30,000, you will need to register for a GST/HST account with the CRA. This account allows you to collect and remit GST/HST on your taxable supplies. You can register for a GST/HST account online through the BRO service.
- Payroll Deductions: If you plan to hire employees, you will need to register for a Payroll Deductions account with the CRA. This account allows you to deduct and remit income tax, Canada Pension Plan (CPP), and Employment Insurance (EI) premiums from your employees’ pay. You can register for a Payroll Deductions account online through the BRO service.
- Import/Export Accounts: If your partnership plans to import or export goods, you will need to register for an Import/Export account with the CRA. This account allows you to import goods into Canada or export goods from Canada. You can register for an Import/Export account online through the BRO service.
- Corporate Income Tax: If your partnership is a corporation, you will need to register for a Corporate Income Tax account with the CRA. This account allows you to file your corporate income tax return and pay any taxes owing. You can register for a Corporate Income Tax account online through the CRA’s My Business Account service.
Once you’ve registered for your tax accounts, you will need to keep track of your tax obligations and deadlines. The CRA provides resources and tools to help you manage your tax accounts, including online filing and payment options. It’s important to stay up to date with your tax obligations to avoid penalties and interest charges.
Maintaining Your Partnership
Once you’ve successfully registered your partnership in Ontario, it’s important to maintain it properly to avoid any legal issues. Here are some tips to help you maintain your partnership:
Keep Accurate Records
It is essential to keep accurate records of all partnership transactions, including income, expenses, and profits. This will help you file your taxes correctly and avoid any legal issues. You should also keep a record of all partnership agreements, contracts, and other legal documents.
File Your Taxes
As a partnership, you will need to file an annual partnership information return with the Canada Revenue Agency (CRA). This return will report the partnership’s income, expenses, and profits for the year. Each partner will also need to report their share of the partnership’s income on their personal tax returns.
Update Your Partnership Agreement
If there are any to the partnership, such as adding or removing partners, you will need to update your partnership agreement. This agreement outlines the rights and responsibilities of each partner and how profits and losses will be shared. It is important to keep this agreement up to date to avoid any legal disputes.
Renew Your Business Name Registration
If you registered a business name for your partnership, you will need to renew it every five years. This will ensure that your business name remains protected and that you have the exclusive right to use it.
As your partnership grows, you may want to consider incorporating your business. Incorporation can provide additional legal protections and tax benefits. However, it is important to speak with a lawyer or accountant before making this decision.
By following these tips, you can maintain your partnership properly and avoid any legal issues. Remember to keep accurate records, file your taxes, update your partnership agreement, renew your business name registration, and consider incorporation as your business grows.
Frequently Asked Questions About Ontario Partnerships
Are there any specific requirements for registering a partnership in Ontario?
Yes, there are specific requirements that need to be fulfilled in order to register a partnership in Ontario. First, you need to decide on the name of your partnership and ensure that it is not already in use by another business. Second, you need to decide on the ownership structure of your partnership. Finally, you need to register your partnership with the Ontario government.
What documents are needed to register a partnership in Ontario?
To register your partnership in Ontario, you will need to provide the following documents:
- Partnership Agreement
- Business Name Registration
- Business Number Registration
- Articles of Partnership
How long does it take to register a partnership in Ontario?
The time it takes to register a partnership in Ontario can vary depending on the type of partnership you are registering. Generally, it takes around 10 days to register a Limited Partnership (LP) through the manual process. However, the process can be expedited if you choose to use the express queue.
What is the cost of registering a partnership in Ontario?
The cost of registering a partnership in Ontario depends on the type of partnership you are registering. Current costs $60 to register a General Partnership, while it costs $210 to register a Limited Partnership. Additional fees may apply depending on the services you require.
Do I need to register my partnership with the Ontario Business Registry?
Yes, you need to register your partnership with the Ontario Business Registry. This will ensure that your partnership is recognized as a legal entity and that you are able to operate your business legally in Ontario.