Features of opening an LP in Canada in 2023
Limited Partnership is one of the most popular forms of incorporation in Canada for representatives of medium and small businesses. The company is managed by partners who contribute their money, labour, property, and other assets. Before opening an LP in Canada in 2023, they enter into an agreement that specifies how income is distributed, responsibilities, and other nuances.
Advantages of Limited Partnership in Canada
- Prestigious jurisdiction.
- Limited Partnership owners can be foreigners.
- Partners can carry any contribution, there are no requirements for share capital.
- There is no tax on profits made by Limited Partnership outside the country.
- No corporate tax return may be filed.
- No audit is needed.
- No income tax.
- Residency in Canada is not required of business owners.
- Protection of personal assets. If a client sues your business, personal assets are protected from a lawsuit.
Features of corporate tax
LPs are not taxable entities, so the company does not have to file returns, pay taxes on income. All of the earnings that LPs receive go to the partners, in net form. If they are not Canadian citizens, they may not pay taxes here. If residents - must include their portion of the profits from the LP on a personal return and pay personal income tax.
Requirements for LPs
- Organization must have at least one general partner, foreigner is allowed. The role can be not only a natural person, but also a legal entity. For example, the partner can be a corporation, which must be registered nationally before that.
- LP is also required to have a partner with limited liability an individual, a corporation. It can also be the general partner of the LP, so one person is enough to register a Limited Partnership.
- The company must be managed by the general partners unless the agreement between them allows for the appointment of a manager.
- The presence of an office in the country is mandatory. Documents of the company must be kept there.
- LP must have a unique name, which can be checked in the database of corporate names and trademarks. If the name is available, it must be registered in the business register.
Peculiarities of opening an LP
LP registration in Canada is possible at federal or provincial level. Nationwide registration allows you to operate across the country without additional permits. Business can be registered through the Canadian government website.
It is easier, faster, cheaper to open LP in Canada at provincial level, but you can work only at the place of registration. If you want to open offices in other regions, you will have to get additional documents. You can apply to open a business through local registration portal (each region has its own).
How to open a Limited Partnership in Canada
Contact IT-OFFSHORE consultants to open a business in Canada in 2023.