Foreign investors who want to open companies in Canada can choose the type of structure they want to operate under based on their needs. While the limited liability company or private corporation is the most employed structures in Canada, there are also other types of business forms which can be used for doing business in this country. Among these, the limited liability partnership or LLP is preferred for tax minimization purposes.
Those who want to open a limited liability partnership in Canada must know that this business form is quite easy to set up, however, it is not available at a federal level, but only at a provincial one.
Below, our company formation specialists in Canada explain the characteristics of the limited liability partnership. We can also help those who want to register an LLP in Canada.
Where can one open an LLP in Canada?
The limited liability partnership is governed by the Company Law in Canada; however, it can be registered without any restrictions only in the provinces of Ontario and British Columbia. This is why it is also governed by the local regulations applicable in these provinces.
In other provinces, the Canadian LLP can only be employed by certain categories of professionals.
Our Canadian company formation agents can offer more information on the legislation governing the registration of an LLP in Ontario and British Columbia, but in other provinces in which it is acknowledged under specific conditions also.
Characteristics of the Canadian limited liability partnership
It is important to know that the Canadian limited liability partnership has a few interesting features, among which the fact that it does not have shareholders, but members or partners. Also, one of the general partners can assume the role of a manager in the partnership.
There are no residency requirements for the manager of the business, nor does it require a secretary. Beneficial ownership is available when opening an LLP in Canada.
Another feature of the Canadian LLP is that is has a limited lifespan of 5 years, however, it can be renewed.
Conditions for opening an LLP in Canada
The regulations for opening a limited liability partnership are not stringent, and those interested in setting up a business in Canada under this business form must consider the following requirements:
- the limited liability partnership must have at least two members who can be natural persons or companies;
- at least one of the members in the business will be a general partner who will be limitedly liable for the partnership’s debts and obligations;
- the other member or members will benefit from full limited liability for the partnership’s debts and obligations;
- the minimum authorized share capital for opening a limited liability partnership is 1,000 Canadian dollars.
It is important to note that there are no residency requirements for the members of the limited liability partnership in Canada.
You can ask our company registration consultants in Canada about the requirements related to setting up a limited liability partnership.
How to register a limited liability partnership in Canada
Upon the opening of a business in Canada under the form of an LLP, the following registration requirements must be respected:
- the name of the business must end in Limited Liability Partnership or simply LLP;
- full information about the members in the partnership must be provided upon registration;
- the names of the partners must be recorded with the Trade Register in the province the partnership is created;
- the partnership must have a legal address in the province it will be incorporated in;
- upon registration, the partners in the business must decide on the contribution of each member.
The Canadian limited liability partnership will be created based on a partnership agreement. Our company registration advisors in Canada can offer more information on the requirements related to setting up an LLP.
Taxation of LLPs in Canada
One of the most important advantages of opening an LLP in Canada, especially for foreign investors, is related to the taxation of this structure: they are exempt from the federal and provincial taxes or corporate income. This is why the LLP is mostly employed by foreign entrepreneurs and companies interested in having a presence in Canada.
The LLP is required to maintain annual accounting books and file financial statements periodically, just like any other Canadian company.
The registration procedure of a limited liability partnership in Canada takes approximately 15 working days and if you need assistance, do not hesitate to contact us. We can prepare the documents needed for the incorporation of the LLP and file them with the Trade Register in Canada.
You can also contact us if you want to start a business in Canada under any other legal entity that is prescribed by the national law.
Our consultants can present the main characteristics of each company type, the rights and the obligations the investors have and any tax matters, which can vary based on the legal entity (the sole trader has different that policies compared to the limited liability company).